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Playing & Trading Strategy

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they would not negate each other...

Posted by: lapuckfan on Jul 21, 14:26 in response to confusedman's post What is the thought process for funds having both the...

Movie X has a $25M strike price on it call/put

Actual Opening weekend BO for movie X is $40M

If the fund max'd out on the call and put long (at IPO price of H$2), then it would lose the H$20k for the put, but it would gain $130k on the long.

If it actually opened at $10M, it result in the same gain, just flip where it comes from.

Basically its insurance against a big variance between Strike and Actual

What is the thought process for funds having both the call & puts of movies long in their portfolio? Wouldn't one negate the other? {nm} confusedman Jul 21, 14:06

they would not negate each other... lapuckfan Jul 21, 14:26

Thanks... I've always been wondered about that. Excellent explanation. {nm} Chefbobcat Jul 21, 18:48

Personally, I disagree with the strategy..... StarBond Fund 15 BUY BONDS Jul 22, 08:41

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