![the wolf of wall street meme the wolf of wall street meme](https://www.memesmonkey.com/images/memesmonkey/aa/aaa78ed1cddf82dc2dfd4995dd369582.jpeg)
This is a risk for the writer of call options, and the writer is paid to take on that risk via the premium. If the option is exercised, the writer (seller) of a call option is obligated to sell the underlying shares at the predetermined price to the option buyer. This theory is based on the huge jump in options trading, and particularly of call options linked to the biggest names that are on everyone’s lips.īuyers of call options gain the right, but not the obligation, to buy the underlying shares at a predetermined strike price by a predetermined expiration date. So here we go for the fun of it, descending a few inches deep into options geekdom and why the Robinhood options traders are now considered the sacrificial lambs that, after they’re sacrificed, will allow all these still ludicrously overvalued tech stocks to rise again during the worst economy in a lifetime. It explains: “Unsophisticated investors getting burned with complex instruments are a less worrying cause for the rout than a change in the firms’ earnings prospects.” The “Heard on the Street” column in the Wall Street Journal summarizes up this meme, that “this type of selloff” – due to these call options undercurrents and Robinhood traders getting wiped out with their call options – “could be good news for tech stocks.” But that’s not happening, the meme goes it’s just a technical issue that will go away. Stocks reacting to and reflecting reality would be the worst-case scenario.
![the wolf of wall street meme the wolf of wall street meme](https://i.pinimg.com/originals/8f/a7/c2/8fa7c2aca6db33b1029e2a0150d7617d.jpg)
Much worse, so the meme goes, would be if the markets are suddenly reacting to the worst economy in a lifetime running on fumes of stimulus, or to the worst unemployment crisis in a lifetime, or to corporate revenues and earnings getting hammered, or to all simultaneously. And after this process is over, since this was the only reason stocks swooned in the first place, their ascend can continue.
![the wolf of wall street meme the wolf of wall street meme](https://ahseeit.com/finance/king-include/uploads/2021/01/127276616_426782665001470_8683644566635896802_n-8202239964.jpg)
But don’t worry, a new meme is circulating on Wall Street of why this time, it’s different – of why this time, there is a geeky reason for the selloff, having to do with call options, and with Robinhood traders needing to get wiped out. If you’re invested in Apple, Tesla, or many other stocks for which not even the sky was the limit, it has been a little rough over the past few days. If stocks made a sudden connection to the worst economy in a lifetime, after having been disconnected for months, that would be a disaster, however.