Tech
Why This Popular Trading Strategy Is So Risky
In 2021, options activity hit a record high, with nearly 9.9 billion contracts traded. That was more than 32 percent higher than the previous record set in 2020. This increase in volume can be traced back to the meme stock mania as millions of new investors jumped into the stock market during the pandemic. Options trading is a popular strategy among institutional investors to hedge their risk in the markets, but if it’s not executed carefully, it can lead to devastating losses. Watch the video above to learn how options trading took off and why the strategy can be so risky.
“The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous,” Keith Gill told Congress.
Gill — who goes by DeepF——Value on Reddit and Roaring Kitty on YouTube — testified in front of the U.S. House of Representatives’ Committee on Financial Services in February 2021. He became an influential figure online and is credited with helping inspire the epic GameStop short squeeze. Gill would screenshot his investment portfolio, showing his winnings from his GameStop position.
A lot of Gill’s portfolio consisted of what are called options contracts.
Options are an investment strategy that gives a trader the right to buy or sell a security.
“It’s best to think of options as an insurance product,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.
Over the past two years, options have become increasingly popular among individual investors using brokerage platforms such as Robinhood.
“Twenty years ago, if you wanted to trade an option, you needed to maybe call up a broker on the phone, you needed to pay a significantly high amount of commission,” Murphy said. “So there’s much easier access to options markets, and the use of options has pretty much just grown alongside of that.”
If used properly, options can be a good way to hedge risk. But they can also be risky.
“Options are the kinds of bets where you can lose everything,” said Joshua Mitts, associate professor of law at Columbia Law School. “Unlike a share of stock, where you might see your portfolio go down by 5[%] or 10% in value, when you buy and sell options, you can lose all of your money.”
“[Options] in and of themselves are not bad tools,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Fire is a wonderful tool. If you don’t know how to use it, it’s going to end poorly.”
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news: https://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC
Subscribe to CNBC PRO: https://cnb.cx/2NLi9AN
#CNBC
Why This Popular Trading Strategy Is So Risky
source
Governments are leaning into drone technology — and fast. Battlefield lessons from Ukraine are reshaping procurement decisions across Europe.
It’s creating opportunities not only for drone manufacturers but also for companies developing AI, software, electronic warfare, and secure communications.
source
Hybrid sales are surging in the US. The vehicles offer consumers respite from high fuel prices without charging. Every other segment has seen sales shrink, but hybrids are going. Three automakers Toyota, Hyundai Motor Group, and Honda together control nearly 90 percent of the mainstream market.
Chapters:
00:00 Introduction
01:27 Chapter 1: Hybrid surge
02:40 Chapter 2: Who was prepared
04:31 Chapter 3: Lagging rivals
06:04 Chapter 4: The future
Produced by: Robert Ferris
Edited by: Meline Rosales
Camera by: Natalie Rice
Senior Managing Producer: Tala Hadavi
Senior Director of Video: Lindsey Jacobson
Additional Footage: Getty Images, Toyota Motor, Honda, Hyundai Motor, Ford Motor Company
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Want to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How To Talk To People At Work, expert instructors teach you how to use everyday conversation to gain visibility, build meaningful relationships and advance your career. Sign up now: https://cnb.cx/4sGlSkh
Connect with CNBC News Online
Get the latest news: https://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC on Threads: https://cnb.cx/threads
Follow CNBC News on X: https://cnb.cx/FollowCNBC
Follow CNBC on WhatsApp: https://cnb.cx/WhatsAppCNBC
#CNBC
Why Toyota, Honda And Hyundai Dominate The U.S. Hybrid Car Market
source
Retail investors are already using OpenAI’s ChatGPT and Anthropic’s Claude to research stocks and build custom trading systems. Now companies including Public and Podium Markets are developing AI tools that can monitor portfolios, rebalance holdings, harvest tax losses and execute strategies. CNBC examines how close this technology is to mainstream use, what it could mean for brokerages and the risks of letting software interpret financial goals and act on them.
Chapters:
0:00 Introduction
1:23 From research to trading
4:14 Beyond stock trading
5:44 Risks of AI trading
Produced and Shot by: Charlotte Morabito,
Additional Producer: Macklin Fishman
Reporting by: Yun Li
Additional Reporting by: Sean Conlon
Edited by: Andrea Miller
Animation: Jason Reginato, Emily Park
Senior Managing Producer: Shawn Baldwin
Additional Footage: Getty Images
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Want to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How To Talk To People At Work, expert instructors teach you how to use everyday conversation to gain visibility, build meaningful relationships and advance your career. Sign up now: https://cnb.cx/4sGlSkh
Connect with CNBC News Online
Get the latest news: https://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC on Threads: https://cnb.cx/threads
Follow CNBC News on X: https://cnb.cx/FollowCNBC
Follow CNBC on WhatsApp: https://cnb.cx/WhatsAppCNBC
#CNBC
How Retail Investors Are Using AI To Make Trades
source
A federal agency looks to keep drunk drivers off the road with the help of high-tech devices.
» Subscribe to CNBC: http://cnb.cx/SubscribeCNBC
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news: http://www.cnbc.com/
Find CNBC News on Facebook: http://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC
Follow CNBC News on Google+: http://cnb.cx/PlusCNBC
Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC
New Apps To Keep Drunk Drivers Off The Road: Bottom Line | CNBC
source
Kevin Delaney, Quartz, and Mike Isaac, New York Times, discuss the data collection practices on platforms like Facebook and how these companies should handle data breach and privacy situations.
» Subscribe to CNBC: http://cnb.cx/SubscribeCNBC
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news: http://www.cnbc.com/
Find CNBC News on Facebook: http://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC
Follow CNBC News on Google+: http://cnb.cx/PlusCNBC
Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC
This Could Be A Mortal Threat To Facebook: Quartz Editor-In-Chief Kevin Delaney | CNBC
source
-
Other2 years ago
Economic crisis Predictions|Bloomberg Surveillance 11/08/202…
-
Other2 years ago
Suppers Around The World – Tasty Recipes Please recognize th…
-
Food2 years ago
Kardea Brown’s Cheesy Hash Brown Casserole | Delicious Miss Brown | Food Network
-
Politics2 years ago
Russia hawks to Putin apologists: GOP stonewalls Ukraine aid, Tucker Carlson’s trip to Moscow
-
News2 years ago
White House warns of Russia invasion in Ukraine before end of Olympics
-
Other2 years ago
Giada De Laurentiis Makes Pan-Fried Zucchini w/ Anchovy Vina…
-
Sports2 years ago
Top 10 Saves from Week 13 of the 2021-22 NHL Season
-
Other2 years ago
Just how beginner Vivek Ramaswamy is gaining some Trump foll…
-
Other2 years ago
MaxMara Spring/Summer 2013 FULL SHOW|Milan Fashion Week MFW|…
-
Politics2 years ago
George Conway: ‘Lying, intimidating, bullying. That’s Trump at his worst, and that’s Trump always’