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Sell short and buy a corresponding (shares short / 100) number of call options at $420 strike (which, in theory, if Musk were telling the truth, should essentia
by defen 8y ago
Sell short and buy a corresponding (shares short / 100) number of call options at $420 strike (which, in theory, if Musk were telling the truth, should essentially be worthless but in practice will come with some amount of premium). That way you have a guaranteed exit at $420/share + option premium paid. You could reduce your option premium cost while slightly increasing your max loss if you went with $430 calls or whatever.
- MichaelApproved 8y agoWhy not just buy puts and simplify the trade?
- defen 8y agoThat could work too; without seeing the numbers it's hard to say. For example you might have a higher chance of losing your money due to theta decay depending on how far out you're buying. And the premium on the puts is going to be substantially higher than on the defensive calls unless you go significantly OTM.