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Comment by Redoubts | Hacker News Reader

What the hell was this guys APPL position, and why did he not know what would happen long before market open?

He bought 50k of Out of The Money PUTs expiring next day. So he bet AAPL would go down. When market opened AAPL went up and his 50k options would expire worthless at the end of day.

To get the leveraged money he bought stock and sold CALLs against it. RH has a bug where they give you credit for the premium collected instead of reducing buying power.

Word on Reddit he had done this before and understood what was happening just fine but did this to make a point. There are specific processes to get the leverage that high and he was allegedly able to handle it. See a comment higher up in this thread.

Also he picked his position because he thought apple was overvalued due to having too many female execs. Even if we concede his point, that should be priced into the stock already, no?

It may be priced in the stock if other traders have the same logic.

If you think it's a good investment thesis, a better strategy would be to build a portfolio where you go long on a basket of stocks with "not too many female execs" and another, offsetting, short basket of stocks with "too many female execs". If you do that properly, you should be able to almost entirely eliminate market and industry risk and basically "amplify" your investment thesis.

This is what a hedge fund originally was (now usually referred to as long short equity funds). Relative value trading. A lost art in our current central bank driven markets.

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