Have you seen what’s going on out there?
Here’s a trader who plowed a hefty $150,000 of his savings into Tesla TSLA options:
And then there’s this guy. He bet his entire IRA on options tied to tech stocks:
These gamblers dabbling with options are part of the tsunami of private investors who swept the market during Covid.
Wall Street used to laugh them off because they didn’t have enough cash to stir the market. They were mere fry compared to market whales like investment banks and pension funds — which own 80% of the stock market.
But as it turns out, small investors quietly exploited derivatives to “outinvest” Wall Street and became the rocket fuel that sent tech stocks to the moon. However, a pullback may be looming.
How options work in a nutshell
Options are contracts that you can trade on a stock exchange like any stock. They come in two forms: calls and puts.
Calls give you the right to buy 100 shares of stock at an agreed price until a certain date. When the stock rises, you make money. Puts are the opposite. They let you sell the…
