Deng Yongping shared the real-time trades of his SpaceX puts. The listed price was about 23.20, and the actual executed price was 23.26 (1000 contracts), receiving about a $2.32 million options premium.
Let’s take a look at how a fellow countryman operates:
Put = put option (bearish option)
Sell Put (short put)
Buyer’s right: If the stock price falls below the strike price, the buyer can sell the stock to you.
Your (seller, Deng Yongping) obligation: When the counterparty exercises, you must buy the corresponding shares at the strike price.
Deng Yongping sells puts—he first receives the $2.32 million premium. According to the agreement: if within the next 5 months the SpaceX share price falls below the strike price, the options buyer will exercise, forcing Deng Yongping to buy a large amount of SpaceX stock at around 115. But if over the next 5 months the stock price stays above 115, the option expires worthless—he doesn’t need to buy the stock, and the $2.32 million premium is pure profit. The real effective cost of the position after exercise comes out to about 92~
Know the four common types of options to avoid confusion
1. Buy Put (buy a bearish option) = short / bet on a decline
2. Sell Put (sell a bearish option) = slightly bullish; willing to pick up shares at lower prices【Deng Yongping’s current position】
3. Buy Call (buy a bullish option) = long / bet on a rise
4. Sell Call (sell a bullish option) = bearish; willing to sell holdings at higher prices
#Space