HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
answer...
Calls have a strike price (included in the stock name)
Calls cash out using the formula:
Box Office - Strike Price = Cash Out
If a Call does not pass the strike price then the Call cashes out at $0 (the amount it made above the call)
If you think a Call is overpriced, you can short it as an investment.
If Movie X has a $20 Call priced at $5... then traders are predicting the movie will open to $25 (20 strike and 5 price)
If you short the Call at $5 and the movie only opens to $21... then the Call would cast out at $1 (21 Box Office - 20 Stike - 1) You shorted at $5 and it cashed out at $1, so you would make a $4 profit per share.
Newbie Question Mar 02, 15:08
answer... Mar 02, 15:30
Follow up Q Mar 02, 15:41
You could lose money. If you short a $20 movie call at $5 and it makes 27 then you lose 2 {nm} Mar 02, 15:48
Ahhh!! Thanks for the replies gents! {nm} Mar 02, 16:15
And if it makes 37 in that scenario, then you lose $12...on a $5 investment Mar 02, 18:19