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In reply to the discussion: Republicans are owning the Dems by not getting flu shots. Huge gap of 25%. [View all]bucolic_frolic
(55,166 posts)You really need loads of capital for a broker to allow you to write naked puts. It was discussed about a stock that plunged to around 45 from 90 if I remember correctly. Someone wrote the 40 puts which brings in premium (money), and then invested that cash into 55 calls. So when the stock bounced to 60 from the crash, they made a bundle. And they hadn't put up a dime. So it was someone who really knew what they were doing and had the assets to back it up. Because if the stock went to 30, they'd be on the hook for 15 points.
Also it was common to hear about long call option positions where someone seemed to know of a takeover, and sure enough they nailed it. SEC would investigate and find the owner at an untraceable Cayman Islands PO Box. Nothing more would happen.
But with crypto, I'm sure the whole system is cleaned up now.