Comment by Galanwe
1 day 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.
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?