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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG)
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To: Dixie7777 who wrote (8349)10/18/1998 10:20:00 PM
From: gambler   of 44908
 
That last post was too much. Here is an illustration of what I was trying to say.

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I would be a fool to wager with somebody that the market will crash and base the wager on a certain number of shares of any stock.

Example:

Say we said 100 shares of DELL was the bet. If the market crashes I get 100 shares of DELL and if it doesn't I have to give the other guy 100 shares of DELL.

So DELL right now is at 56 11/16, say 56 for simplicity.

So say I bought 100 shares at 56 and so did my opponent.

Scenario #1) If I lose the bet I am out $5600 and more on paper because say DELL was at $65 because there was no crash so my payment would be worth $6500.

Scenario #2) If I win the bet it is because the market crashed and I receive 100 shares of DELL at current price which will probably be about $40 after a crash. So I receive a $4000 asset.

So if I win I get a $4000 asset, not to mention I lost $1600 on my stock that I bought for the bet, on paper. If I lose, I lose an asset worth say $6500. Now wouldn't I be better off taking $5600 cash and buying DELL at $40 after the crash happened that I bet on? Also, wouldn't I be better off paying out $5600 cash instead of an asset worth $6500?

This is an example of my logic.


Gambler

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