Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by defen on Tuesday September 18, 2018 @12:41PM
(#18016796)
Sell short and buy a corresponding (shares short / 100) number of call options at $420 strike (which, in theory, if Musk were telling the truth, should essentially be worthless but in practice will come with some amount of premium). That way you have a guaranteed exit at $420/share + option premium paid. You could reduce your option premium cost while slightly increasing your max loss if you went with $430 calls or whatever.
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Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by MichaelApproved on Tuesday September 18, 2018 @12:47PM
(#18016855)
Why not just buy puts and simplify the trade?
Re:Tesla Faces U.S. Criminal Probe Over Musk Statements
by defen on Tuesday September 18, 2018 @05:58PM
(#18019551)
That could work too; without seeing the numbers it's hard to say. For example you might have a higher chance of losing your money due to theta decay depending on how far out you're buying. And the premium on the puts is going to be substantially higher than on the defensive calls unless you go significantly OTM.