BIL Chook back in short, page-10

You are correct that $5 is an outside bet.

actually the odds of it getting below 6.50 by 17 Sept are 250 to one based purely on 27% volatility.

Theoretically if I am correct with my $5 call I don't need to put up the house to make $1000000....$400 of $6 Sept puts would do the job. In actual fact I don't think they are available at that strike so we will just have to pyramid the trade along the way.

So to conclude

With the right strategy I can make a million bucks off say a grand's worth of options if I am right.... BUT it's a 250 to 1 chance that it will get to 6.50 in September ( my calculator won't do the $5) so I'm maybe not gonna get my mill.

However if you go back to 18/5/2001 the odds of BIL falling to $9 were over 300 to 1 and it did it!


This was quite an interesting exercise!!!!!!!