RBLX Puts after a 40% run

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Ok quick post on this. Often when we see something run up a lot, for whatever reason, market makers request and have the option chain extended. There are a lot of theories that go into that but I just want to focus on this play for now. Once I saw option chain extended, I bought some puts for this week and next week. Can pick any strike. You do need to be careful and make sure iv isn’t crazy and that you try your best to buy the top. I bought too early and had to close them and reopen them later in the day, when stock price was around 108 to 110. You must have a good entry and maybe waiting until the end of the day to see how it trends is best. As I type this it is down to 106 but moving up. This doesn’t work every time but has more times than not. You also need to understand why it is going up, as you also don’t want to fight a trend. Their good earnings is causing it to push up so be careful with this one. I also only grabbed 4 puts so not a lot of risk. Thoughts?

Earnings below
Roblox Corp (NYSE: RBLX) is trading significantly higher Tuesday after the company announced better-than-expected third-quarter earnings results.

Roblox reported a quarterly earnings loss of 13 cents per share, which beat the estimate for a loss of 14 cents per share. The company reported quarterly revenue of $509.3 million, representing a 102% increase year-over-year.

Roblox said daily active users in the third quarter totaled 47.3 million, representing an increase of 31% year-over-year.

The company said that hours engaged were 11.2 billion during the quarter, representing an increase of 28% year-over-year.

“Engagement is our north star. We’re very pleased that during the third quarter, people of all ages from across the globe chose to spend over 11 billion hours on Roblox. We are happy to report that the developer community earned over $130 million in the quarter and is on pace to earn well over $500 million this year,” said David Baszucki , CEO of Roblox.

Roblox operates an online video game platform that lets young gamers create, develop and monetize games for other players.

Related Link: Roblox Q3 Earnings Highlights: Revenue Up 102%, DAUs Hit 47.3M, October DAUs Grow Before Outage

RBLX Price Action: Roblox has traded as high as $103.86 and as low as $60.50 over a 52-week period.

The stock was up 26.30% at $97.23 at time of publication.

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Great idea, was thinking of going on the short side on several companies in view of debt ceiling

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This seems like a risky play to me. Roblox is enormous, and the stock very well may be starting an upward trend. I imagine the price will come down over the next few weeks, although it’s very hard to say how much of a dip there will be. The closer to ATM puts one can buy, the better, but it seems that this is the case most of the time. I imagine ATM puts going out a few weeks for expiry will be the best play for this. Going to continue watching (sold near the top yesterday), and if I play puts, I’m going to keep an eye on IV and theta.

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IV is a little too high for me.

I definitely think its overbought and due for a pullback but puts right now is just a bit too much for me.

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I’m glad the conversation from yesterday in VC was made into a thread. I bought 1 cheap put pretty near the lowest price of the day, so hopefully they will pay off today or the next.

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They added up to 150 yesterday on TD and this morning they added 155 too.

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As soon as I see green I am also selling so this play could pan out this week.

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Thanks JB. I’ll watch out for weakness and see how it goes from there.

Chart:

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image1813×947 223 KB

Last time it was way overbought, it took 17 days to find a bottom where it could bounce back hard.

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looks like its already down $5 in premarket

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@PaperhandsJB I love the theory on this. I am experimenting with this on some Ortex signals. There is so much to be said about these stocks…what goes up must come down. However, I would venture to say they hit a new floor versus going back to their old floor. For instance, if you have a $25 stock and it runs to $50, I would say the new floor is between $30-35. Buying too far OTM can get you in trouble. Looking forward to hearing how this goes.

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Ok so it worked but almost because timing was perfect. I bought almost at the peak yesterday and sold off that first big red knife when market opened. Was about 40% to 50% profit on all the puts I bought. However, most of them now at 10am Est are half the value than what I sold at, so this was very risky and a small amount of luck. It’s worth watching and I may buy puts again later today depending upon the market and how it tracks etc., but so far this theory has paid. When they run up not from really great news, the risk is less. GL.

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This has been nothing short of great. Hope the family here made money off this.

I didn’t, too bad.

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Nice job on timing this one @PaperhandsJB

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Ok this one really worked well lol

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