The details of my Big Bet against Krispy Kreme

[mrbaseball]

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just wikied put condor and have a basic idea what you are doing but could you explain this in more detail please?


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Just an option spread with 4 strikes where you go long short short long. In this instance buy the 50 put sell the 45 and 40 put and buy the 35 put. What you want with this particular spread is a move to the middle of it, basically the 40-45 range. If that happens the spread should do nicely. It closed Friday at 55 cents and if it got into the middle (depending on when) it could easily triple or quadruple. Best case would be between 40 and 45 on expiration day which would mean it was worth 5 bucks or about an 800% return. But if you could do it at 55 cents I think it looks like a nice cheap shot. But with the low trading volumes I expect executing the trade would be a nightmare. Best way would be to buy the 50/45 put spread and then sell the 40/35 put spread. But with the low volume it would be difficult to get it on without paying up too much.

It's also a pretty big move from where it is right now but in this environment it could easily happen. All you can lose is what you payed for it if it doesn't go anywhere near the 50 or below.

[DesertCat]

BTW I just added up this trade and I think I put $26k into KKD options. Right my remaining Jan. options are worth over $10k (near zero a week ago) as KKD closed at $3.24 today. Previously I sold $17k worth. So in total it appears I'm actually ahead almost $2k! Better than I deserve

[schnoodleC]

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given the money you spent on options, why not just short the stock outright and buy a call at a stike you're comfortable with (i.e. one where (K-S0)*your investment is your maximum comfortable loss or something like that...you'd earn money on the call though as St approached K so you could probably go a bit higher than you would if it was a non traded european option)

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KKD due to some reasons related to all of its financial mess could not be shorted outright. I tried online for a month at the same time CAT made his original posts and there where never any shares so then I called my broker to find out what the real story was.

CAT, I think the risk of your play has everything to do with options and little to do with the fact that it is a short. Options are always way more risky because of the time component. The same is true for longs/calls.