The following is the OptionBT
sighting of
"Let the Little Guy Win".
Go to Description Section
Title :
"Let the Little Guy Win"
Position taken :
November 10,2000
Position Description :
Nineteen Months out,
50 point vertical bear put spread for debit,
Value of the spread is $5000/pair,
Long side out of money by 165 points,
Short side out of money by 215 points.
Expiration/Settlement :
June 2002 / Settlement = 991.33
Count :
30 pairs
Credit or (Debit) :
($27,376)
Margin :
None (Long Put Strike >= Short Put Strike)
Results :
Value of the spread = $5000 * 30 = $150,000
Less the debit = ($27,375)
Net = + $122,625
Comments : "Let the Little Guy Win"
Is it true that the little guy "always looses"?
The answer is "No" and here is a case in point.
"Let the Little Guy Win" put his money on the
line "Nineteen Months" prior to expiration and hoped for the best. He was
165 points down stream and the only way that this bull spread on puts could
obtain profit was for the SPX to tumble 215 points in the next 19 months.
It did better than that. From the date of this transaction until the
June 2002 settlement the SPX fell some 375 points.
Whether this was luck or skill the result is that the "Little Guy" was spot on.
The market did overrun his position as planned.
Although the position started to show promise early on,
let's hope that the "Little Guy" had the persistence
to go with his boldness and stuck it out to the end.
If he did, then he took home the full prize of
$122K for his $27K investment.
This rate of return is no "small guy" achievement.
This shows that sometimes the market will "Let the Little Guy Win" after all.
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