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If it were only $55M in puts, they would not have needed the bailout. What people in the know think is that they sold calls to finance the puts to achieve a net
by zephyr-wind 6y ago
If it were only $55M in puts, they would not have needed the bailout. What people in the know think is that they sold calls to finance the puts to achieve a net-zero position... which would be an unlimited-risk synthetic short position.
- MichaelBurge 6y agoHow do we know it was a bailout? Maybe they just raised extra money to take advantage of a volatile market.
- zephyr-wind 6y agoWord on the street has that Melvin is down 80% YTD, some other L/S funds 20-30%.
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- zephyr-wind 6y agoOf course, we don't know for sure. But it's strange to sell off future revenue shares for capital today when you can simply double-down using leverage.. unless they ran into their margin limit.
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