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Non-Tech : Kirk's Market Thoughts
COHR 191.72+0.2%Dec 26 9:30 AM EST
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To: robert b furman who wrote (6998)4/18/2019 1:46:51 PM
From: Kirk ©  Read Replies (2) of 26875
 
Thanks. I'll have to study this.

You didn't mention what the worst case risk is and how to limit it.

My guess max risk is the day after you sell a put an insider shows Musk had run out of money, entered rehab and the stock declared BK because nobody would loan them money.

I look at worst case and how to prevent it since I am in no need for a home run.... just preserve capital.

Sell a put in the money and the stock goes BK...
If Tesla got a pop up the the midpoint of the BB 307.70,and the premium was the same as where it was in the money now a put would have a premium of where it is now at @275 (2 bucks in the money 47.50 to 47.80)

Say sell it at 47.65. Just one contract would bring 47.65 x 100 = $4765 dollars. Ten contracts would be $47,650.

If I understand you gained $4,765 for each contract with a max risk of having to give the buyer 100 x $307.70 or $30,707 per contract. If it goes under you've lost ~$26K with an attempt to make $5K.... give or take.

10 contracts and max risk is over $300K!

Yes, you could buy to cover if the decline was orderly, but isn't that where they get short covering rallies?

My simple mind says if Buffett doesn't talk about the strategy in his annual letter, then it is probably more one for those who want to take a ton of risk to sell themselves if successful for 2/20 next year... and if they fail, the reboot and attempt it again with the next ploy.

make sense or did I miss something?

Kirk
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