>, higher stakes version of the roulette wheel at a casino As an example, Mark Cuban used put&call options to lower the stakes of the roulette wheel.[0] He s

>, higher stakes version of the roulette wheel at a casino As an example, Mark Cuban used put&call options to lower the stakes of the roulette wheel.[0] He sold his startup to Yahoo for ~$1.4 billion of stock (1999 stock price was ~$95) -- but he couldn't sell it immediately because it was locked up for 3 years. That's a long time for Yahoo stock to potentially double... or go all the way down to $0. To protect his wealth and get around the lockup, he bought put options to limit his downside. He also sold a matching set of call options to offset the out-of-pocket costs of buying the expensive puts. Therefore, deliberately limiting his upside was the proverbial "price to pay" to protect his downside. His financial engineering reduced the vagaries of the volatile stock roulette wheel. It turned out that not getting too greedy with a potential gains and worrying more about the potential losses was a smart move because as we now know, the 2000 Dot Com Crash happened and the 2002 Yahoo stock price plunged to just $8: https://www.theatlas.com/charts/B1RjK9Q_ https://www.theatlas.com/charts/B1RjK9Q_ [0] https://www.acceleratedfi.com/real-world-options-example-how-mark-cuban-used-options-to-survive-the-dotcom-crash/ https://www.acceleratedfi.com/real-world-options-example-how...