Not quite … you have sold something, which now is worth less. Essentially you buy it at $0 and hand it back to them … Trading halted dont mean squat … worthless paper is floating around … and can be bought for nothing.
Buying a Put … you’re buying the right to sell a stock at the strike price. Whatever happens to the stock … not your problem, the transaction happens anyway. BTW in a market, equity trades out number options trades 10 to 1. Buy options outnummber puts prolly 3 to 1. So when the put call is being excercised, the brokerage is raking in the big money on the worthless buy options. They have very sophisticated software that lets them finely manipulate their exposure that if you’re making money on 1 … you can bet they are taking it in on 100. They are also so braced against the “armageddon scenario” … that if it tanks … they make the most $$$. There is a yeild curve called a condor … it moves significantly in any direction, they make like bandits.
You want to cry now … OK here it is …
An out of the money put (stock selling at 50 and you buy a put for under 50, but typically say 40) will cost you 25 cents per contract. If the stock tanks like it did … you stand to make $40 per 25 cents you spent.
When I used to watch my old friend play options, he had ~7-8K split in ~20-30 companies in various sectors. 200-300 each. 90% os them expired worth less … and the other 10% doubled his $$$ and armageddon scenarios are the bread and butter. If he had a few of those … he’d have made like bandits.
Cool.
Cow_tipping.
