Thread by @live2beingu

#AMC #GME #TSLA #KOSS #OCGN #MEMESTOCK #MOONING #L2BU Part 3 Skin In The Game like I said in part 1 I will post a video of this today. So that way I will walk you through each part and what it ultimately means but I wanted you all to get the general gist of it here before I spoke

about it on my YouTube channel. So I digress lol!. Continuing where I left off in regards to short call options....It is important to understand if the call option is higher than the strike price at expiration then its in the money. This means that the person who bought the

option from you will expect to sell shares at the entire strike price. If the stock does a gamma squeeze then this strategy goes to the graveyard as you will have to cover the contract. 👀 For example theoretically thinking as a HF/MM a share of AMC @ 9.90 you think is going to

drop so I sell the option for (0.11) member options are traded at 100 shares so that's 100x0.11 = $11. You get that right then. But then lets say I'm APE Strong 🦍🐒🍌🍌 We have a rise from the 9.90 to 50 and the options sells for 0.50 X 100 = 50. Well Then as a HF/MM I have lost

39 dollars. I can do 1 of 2 things I can either buy back and sell the shares or buy back the short call.

Long Put Strategy - has a strike price, which is the price at which the put buyer has the right to sell the underlying asset. So ex. If the options strike price on GME was

$680 even if the stock drops to $280 dollars. I have the right to sell at that $680 dollar price tag. However, if APES yolo and the FV of the stock goes to 1,000 then the put becomes worthless. If the trader sells its an exercise they will sell at the underlying strike price and

they have the option to exit the put before the expiration. This is one of the most favorable strategies as your loss is limited to the option premium and it muss fall before the expiration date.

Covered Calls- is a very popular option strategy used by investors who think the

stock price will not change in near term. TRADING SIDE WAYS 👀👀👀👀👀. How does this work? Covered calls are constructed by holding a long position in a stock then selling the call option on the same asset. Equal to the total value and shares of the long position. Hence the term

"Covered" b/c they own it. If you didn't know a covered call option gives you the right to sell the stock at anytime for the market price. A covered call writer sells this right to someone else for cash, buyer of the option gets he right to own your security on or before the

expire date at the strike price. Cash is immediately received when paid. A covered call is the most profitable when the stock moves up the strike price, generating profit from the long stock position. So if the stock increases option becomes worthless and the premium paid stays

with the seller. Risks here Naked calls...because you have the written to something you do not own.

My last and final strategy of the day and then I will pause and come back in the am. is the Bear Call Spread- Goal hear is to profit from a natural to bearish position: A bear

call spread involves one short call w/low strike price and 1 long call higher price. Used for net credit and ports from either a declining stock price or from the time erosion of both. I'm just login very high level here but I wanted to make sure you were aware this exists.

So lets try to tie them all together; The Rule SR-OCC-801 was written for a purpose. The purpose being the HF and MM are shorting calls deep in the money, going long on puts, using covered calls, and bear spreads to kill our options vibe. Like it's counter part at the NSCC the

occ has determined that on its own accord the risks associated with the potential defaults in the options market is too great for them to not change their rules. Thereby ensuring there will be enough funds should any of the aforementioned Strategies and others could go south

in the options market i.e. losses and liquidity short falls and having enough Skin In The Game. Why is this important? Because depending on how/what strategy used this would be bad as you could be short 1 contract or 100 shares. Okay but I still don't get it...This would prove

problematic because as the OCC points out that per Rule 1006 1)failure to discharge duty any obligation arising from confirmed trade accepted by the corporation. Exchange of 1 option contract or 100 shares. 2) Failure to perform obligations from exercised contracts. 3) Not being

able to cover stock loan (Short Interest and Interest Expense) or borrow positions 4) Liquidation of open positions 5) Protective transactions 6) As a result of a clearing member to make a required payment. 7) Failed bank, securities, or commodities transactions. These 7 things

As I state in part 2 would arise or bet tripped and trigger by each of the strategies I just talked about. There are probably others but this is the risk. When the rule 1006 is triggered the Capital management policy "Skin In The Game" will take over and essentially cover any

short comings by taking the Losses + Making + Clearing Fund + Minimum Corp. Contribution + LNAFBE = Total -> Residual (Balance Remaining) + Clearing Fund +EDCP + Fund Non Members. So okay KT why do I need to know about this....it's happening right in front of us day in and day

out. at the beginning part of this week. I had some help from teammates who let me know that their were both short and covered calls and Long Puts that had flooded the market at the beginning. Well how do you know that? well for starters do you remember I told you theta was

important well a positive theta = short call or put. A negative theta is a long put option. Okay can you give me an example. Check your charts...these strategies are being used on AMC, GME, TSLA, OCGN to say the least. We've all been pretty oblivious to it as

we'e spent months looking at the NSCC side of things making sure that our securities are perfectly find meanwhile they've been robbing us blind int he options market by playing both sides and our securities market gets no where. Basically we end up trading sideways because of the

types of strategies used on that particular day....Okay...I'm going to get some rest I'll continue this further in the morning. We have a lot to talk about. But I will combine the 3 thread app unroll in my next tweet out. @threadreaderapp unroll