In a few short years, these two turned $100k into $10 million.
They did it buy buying options with low delta's because people thought that there was going to be no upcoming volatility. When they were right, they made millions and acted on their option call. When they were wrong, they lost next to nothing because the deltas were so low already.
iirc they were around 20-22 years old.
Is this still possible? Any anons experienced in options trading? How in the fuck did these two do it?
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$10mil is not that much
Cool. Can I borrow 10 mil?
>100x returns aren't much
ok user
you realise that they did this in a regulated market, in the 2000's right? It's not some anomaly like bitcoin. They had a sure strategy. Literally beat the system.
Im just wondering how tf they managed to find options whose deltas were so cheap when it was public knowledge that said companies were about to go through a huge volatility swing.
Ehm it is for most people. You can live a very comfy life by withdrawing at least 300k/year for the rest of your life.
and where are they now?
they turned their $10 million into $120 million in 2008 crash. idk where they are now tho. probably chilling in some island
i found pic related btw. (1/2) it explains how they did it pretty well
(2/2)
Actually. That was an exaggeration in the movie, if you read jack schwager's market wizards, you will find they actually had a family office (a private small hedge fund) and had family money and were not that young. When the Big short was written and movie was made, they asked that their personal story not be revealed.
Can this be done? 2008 was a rare opportunity where a lot of leverage existed in the system so the bust would be huge. You need to have absolute certainty of the event, and then even if you buy out of the money options or CDS, you can't put all your money in at once because if you're even somewhat wrong you lose everything. If you break down your bets into multiple sizes the carry cost will burn up your capital over time.
1) I trade options on 1M + account
2) Work in finance
3) CFA
really interesting thanks user. id love to know what they're up to now, obviously very smart people.
This was from memory, but here is what I found online.
>Can this be done?
wasnt talking about the big "black swan" bet that really let them /makeit/ but the options trading thing? how often are the risks on options miscalculated by the brokers that sell them?
>brokers
Uhhhhhhh
It's usually other counterparties selling options. In the case of equity options, for every buyer there is a seller. I sell options, sometimes naked sometimes covered by other options as part of a strategy. How often are they mispriced? PRetty often when you see a big earnings move, out of the money options can gain like ~10000%, but those events are 1/1000
Gambler wins big at roulette, bet it all on 27 then bet it all on 5, how did he do it?
>no films were made about the other 100,000 gamblers who lost it all
The Big Short treated the players of the story like they were heroic Robinhood types when, in actuality, they were the gasoline that turned a forest fire into actual hell.
how so?
Here’s a good read on the subject if you want to DYOR.
Where do you work? I work in IB on Wall Street
thanks for posting this, user. No question (in my mind) that Lewis is a good storyteller and i like his books, but very helpful to have an alternative perspective.