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by raziel2701
2020 days ago
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I think they bought those stocks(options) because they knew that of course those industries would be bailed out and thus there would be a huge catalyst event that would increase the implied volatility and thus the profits they make. And the other and perhaps more important factor was that those stocks were simply much cheaper than spy shares, and therefore their options would be cheaper too. |
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This is exactly the point; be careful of thinking like this. Some of the biggest profits come from being contrarian to the market view.
SK: https://www.reuters.com/article/us-hanjin-shipping-debt/bank...
USA: https://www.nytimes.com/2014/09/30/business/revisiting-the-l...
UK: https://en.wikipedia.org/wiki/Black_Wednesday