[dalbasal]

Melvin had $55 million worth of put options on GameStop, which are the opposite of calls. Puts assume the share price of a stock will go down and give their owners the option to sell a stock at a certain price. Melvin assumed GameStop’s stock would fall, and bought puts allowing Melvin to sell GameStop’s stocks above the market price, netting Melvin a profit.

https://www.esquire.com/news-politics/a35339535/game-stop-st...

[adrr]

The risk in buying puts is the cost of contract. You can’t lose more than you put in with buying puts.

[dalbasal]

Following paragraph, same article:

Melvin is that it was also shorting GameStop, meaning it was borrowing shares of GameStop, selling them on the market and using those proceeds to make other investments. Problem is, Melvin eventually has to return those GameStop shares. So now Melvin has to buy GameStop at their new, inflated price, only to give those shares back to the original owner

https://www.esquire.com/news-politics/a35339535/game-stop-st...

TLDR is getting onerous

[keeganpoppen]

right, they were buying puts, not writing them, like you said they were...

[dalbasal]

you got me.

[thefreeman]

owning puts is the opposite of writing puts