Comment by rohitb91
4 years ago
The market can stay irrational longer than you can stay solvent
I think the flood of retail investors with disposable income and government benefits is leading to absurdities in market pricing. See: Hertz skyrocketing after announcing bankruptcies.
After all, the stock has dropped 90%, how much lower can it go right?
Well, to the new investors, all the way to 0.
This is not even that. The parent is talking about the case where the stock does indeed go to zero and get de-listed from the exchange, in other words the market becomes rational. At that point, you're holding put options that are ridiculously in-the-money, but you can't execute or sell them to take your profit because the underlying stock is gone. So, your highly valuable stash of Nikola puts becomes worthless ...
Someone correct me if I'm wrong, but I'm pretty sure that's not how it works. If it gets delisted, you would buy the pinks to get the shares. The stock doesn't just disappear when it's delisted.