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Selling (writing) options is NOT how you bet against a company. You either sell the stock short or buy puts.
by blitzar 1y ago
Selling (writing) options is NOT how you bet against a company.
You either sell the stock short or buy puts.
- hencq 1y agoHow is selling call options not betting against a company?
- blitzar 1y agoDependant on strikes (assuming at the money, assuming naked short) you would still profit if it stayed the same, or went up a little in price. Selling options is also being short volatility, so the 'bet' is that less will happen than is expected and, in the case of selling calls, with a preference for happenings to be downward. A downward move could also see volatility go up significantly and increase the value of the options you are short, especially longer dated options.
- tommy_axle 1y agoTechnically writing calls is also taking the downside.
- mikestew 1y agoTechnically, yes. But you have to own the stock first (‘cuz writing “naked calls” is not for the faint of heart). Easier and less complicated to just buy puts, especially if you’re looking up “money laundering” in the dictionary.
- astrange 1y agoI would simply correctly price the equities in the first place.
- deleted 1y ago[deleted]