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I kind of have a secret about this: if you’re an accredited investor, you could 100% take short positions on these shares by borrowing shares from employees and
by RC_ITR 4y ago
I kind of have a secret about this: if you’re an accredited investor, you could 100% take short positions on these shares by borrowing shares from employees and seeking them in one of the random secondary markets that’s out there.
It’s just no one does because the asymmetric downside of going naked short on companies with low market caps (“uh oh, Uber just bought this company for 10x my strike price because xyz stupid reason”)
If you want to get really complicated you can write puts, but good luck pricing them and finding enough liquidity.
- game-of-throws 4y agoDid you mean write calls? Yeah the problem is liquidity, and the "bespoke" nature of this kind of bet. I can't just stroll into Bird HQ like Christian Bale and ask them to do all the work for me. I only want to risk a few thousand, not millions. Even setting up the deal might cost more than I was willing to risk in the first place.
- RC_ITR 4y agoYeah good call out. As someone who has never/will never write a contract, I had the mental block of flipping it vs. buying.