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The fact you're confusing option types is not helping your credibility. Writing put options is a bullish move. Melvin may have been writing CALL options (I doub
by threedots 6y ago
The fact you're confusing option types is not helping your credibility. Writing put options is a bullish move. Melvin may have been writing CALL options (I doubt it to be honest but maybe).
- dalbasal 6y agoMelvin had $55 million worth of put options on GameStop, which are the opposite of calls. Puts assume the share price of a stock will go down and give their owners the option to sell a stock at a certain price. Melvin assumed GameStop’s stock would fall, and bought puts allowing Melvin to sell GameStop’s stocks above the market price, netting Melvin a profit. https://www.esquire.com/news-politics/a35339535/game-stop-stock-short-squeeze-explained/ https://www.esquire.com/news-politics/a35339535/game-stop-st...
- thefreeman 6y agoowning puts is the opposite of writing puts
- adrr 6y agoThe risk in buying puts is the cost of contract. You can’t lose more than you put in with buying puts.
- dalbasal 6y agoFollowing paragraph, same article: Melvin is that it was also shorting GameStop, meaning it was borrowing shares of GameStop, selling them on the market and using those proceeds to make other investments. Problem is, Melvin eventually has to return those GameStop shares. So now Melvin has to buy GameStop at their new, inflated price, only to give those shares back to the original owner https://www.esquire.com/news-politics/a35339535/game-stop-stock-short-squeeze-explained/ https://www.esquire.com/news-politics/a35339535/game-stop-st... TLDR is getting onerous
- keeganpoppen 6y agoright, they were buying puts, not writing them, like you said they were...
- dalbasal 6y agoyou got me.
- DangitBobby 6y agoWhat does their credibility have to do with the point being made? Are they right or aren't they?