SPX 0.00% 0.7¢ spenda limited

it's just the beginning for Cirralto!, page-19834

  1. 1,332 Posts.
    lightbulb Created with Sketch. 331
    That is a rubbish justification for buying the options.
    For a start, you have forgotten theta, so tails will be trailing heads by 2.5 at expiry..... not 1.4 as per your masterful calculation (thanks for the lesson in options markets and understanding, not).

    Thus, the rewards for buying tails now become, at expiry, 3.5% if SP is x2, 15% if SP is x3, and 20% if SP is x4.
    If share price isn't at least double, then you lose.

    The extra 15-20% potential gain is based on the punt (which is looking more unlikely by the month to a lot of us) that this is a definite 3-4bagger between now and then.
    The risk:reward is crap.
    The justification isn't there for serious investors.
    Amateurs however love to lap it up because they think it makes them look smart (until they try and explain it to you).
 
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