Re: The details of my Big Bet against Krispy Kreme
Schnoodle... The entire string of option trades is within Cat's risk tolerance, and he went in to this initially, knowing that he was putting his entire "bet" at risk.
However, his allocation among various dates when he made that decision was based on certain events causing the effects he desired and spreading his risk across various time frames.
He now has more information... the April report was released and it did not cause the effect he was looking for that would make the May options profitable... he knew the probability of this when he made his decision...
This is very similar to the flop or turn in holdem... he can decide not to push roughly $500 into the pot (in actuality it is taking back a bet, but the analogy still holds)
fwiw... EV is not only a poker concept... Expectancy is an important part of trading!
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