HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
Question about shorting Calls/Puts
Okay, I believe I understand how buying long shares of a weekend call or put works, but I've noticed that some people also buy short shares of the calls and puts, and I'm not sure what they're there for.
Say a movie is opening with a Call/Put number of H$10. As I understand it, if you buy call shares you're betting on the movie making over H$12 (the $10 plus the $2 you paid for the share), and if you buy put shares you're betting on it making under H$8 (the $10 minus the $2 you paid for the share). If you're shorting a call share, does that mean that you're betting that it will drop from the $2 a share and not betting anything about what it'll do over the weekend? Is there any possible payout on Monday if you short a call or a put, or does everyone sell after the price has gone down? Does it only pay if the movie makes between $10.00 and $11.99 for a shorted call? As I'm understanding it, it seems like these would have a pretty limited benefit and would be quite a bit of risk for not much reward, but it's very possible I'm just not getting what they mean.
Can someone explain to me what I'm missing? Thanks.
Question about shorting Calls/Puts Aug 24, 11:45
ok Aug 24, 12:08
Thanks for the explanation Aug 24, 21:25