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by parliament32 13 days ago
Yeah you're not wrong. I didn't think about it that way because you can't really break something out of an ETF basket, and you also don't control the ETF basket, but if you think those risks are minimal it's probably fine to just compare dollars-to-dollars.

Personally I would still probably go with the long put strategy unless the price difference is exorbitant.
1 comments
Galanwe 13 days ago
> also don't control the ETF basket

The ETF is this case follows the index, so there's really no surprise.

> I would still probably go with the long put strategy

Just, don't. There is a world of complexity between a simple short, and entering an option contract with non linear pnl.

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parliament32 13 days ago
The ETF that seemingly arbitrarily changes its rules? In such a short time frame too? This change is going proposal to implementation in.. what, two weeks total? I don't know about you but I don't keep up on this stuff unless it hits the news like this one.

You are not entering a contract with a long put. You are buying a contract that, if you want, you can just let expire with no obligation to do anything. It's effectively simple insurance (as opposed to a short position, which is an actual liability, which will eat you alive in exceptional circumstances).

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Galanwe 13 days ago
> You are not entering a contract with a long put

Yes you are, and options are complicated. Actually, the mere fact that you think they are "simple insurance" is enough proof to me that you probably don't understand it enough to safely buy one.

> You are buying a contract

Oh right, you've bought a PUT, now the fun part: you have to manage your position/exposure, could you enlighten me how you do that?

Could you explain me why buying a SpaceX PUT in a high IV regime (e.g. soon after IPO) will have it drop 40% when the IV decreases after 1 month, even though price moved in my favor? It should be simple, it's just a simple insurance product right?

Seriously. Someone, likely not super financially literate, ask a simple question about how to neutralize a stock exposure, and your answer is to advise buying options? Just stop.

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parliament32 13 days ago
Spicy.

Look, I think you're missing my point a little bit. Let's simplify it to risk, since that's what kicked off this conversation.

Your pension or whatever holds an ETF that (soon) contains some SpaceX shares. You buy a put option on SpaceX direct. What's the absolute worst thing that could happen?

Your pension or whatever holds an ETF that (soon) contains some SpaceX shares. You short sell a SpaceX share. What's the absolute worst thing that could happen?

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