3 ms·
I must be missing something - that looks like a horribly asymmetric payoff. Why would you ever do that?
by MR4D 7y ago
I must be missing something - that looks like a horribly asymmetric payoff. Why would you ever do that?
- ivalm 7y agoSome people make concave bets in high vol markets, most of such people are suckers.
- User23 7y agoThere is absolutely nothing wrong with making bets where the payoff is smaller than the money risked, so long as the bet has positive expected value and the bettor's risk management is sound. It's the idiots who lever up too high or otherwise disregard bankroll management who get ruined when a "sure thing" doesn't go their way.
- LZ_Khan 7y agoThe worst case scenario is only when DAL goes bankrupt. If the commenter believes this is unlikely, then there are only two good scenarios (making some money off the premium, or getting DAL at a good price) The payoff is even if the share price goes to ~ 9 bucks.