I know you guys aren’t financial advisors, but the husband is doing something I don’t understand. He’s planning on buying Disney stock so that when it tanks he’ll profit. The rest of our money is in DWAC, 1000 shares. Is what he doing safe?
You're viewing a single comment thread. View all comments, or full comment thread.
Comments (11)
sorted by:
The cost of the put options (sometimes called sell options) is the entirety of the risk. Buying an option is generally low cost, a small fraction of the stock's share price. If the price drop exceeds the cost of the options (+ commission) by the time the option expires, the strategy will make money.
I’m grateful to you for explaining. I’m clueless about the market. If you don’t mind, would you comment on his choice of Disney for the puts? Just would be interested in your opinion. He’s going to do what he wants, but I would be interested
Politically Disney is heading downhill. I wouldn't buy Disney, on that alone. But selling an option depends entirely on the price and the time period, which your husband will know. The investment could be really stupid or really smart depending on those variables. I'm afraid I don't care enough about the stock to be informed about it, so I can't give you an informed opinion.
Thank you. Appreciate your explanation for me and the information.