Re: The details of my Big Bet against Krispy Kreme
It might be within his risk parameters but there is no risk management. Options spreads are high. As soon as you buy a put (especially deep OTM puts), you get a nice big fat red number in your P&L column because of the high spread. This is tied to the liquidity issue as well. I don't see any risk management here. His trade reflects a poker mentality: find a +EV opportunity (assuming this is +EV) but totally neglect the risk management aspect.
Edit: I do truly hope it works for him - I don't mean to come across that I want to see him (or anyone) lose money.
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