Users are jumping ship to Instagram. Once they duplicated the functionality it was the nail in the coffin for snap. If I had a ton of cash lying around I’d short the stock to zero. Insta was Facebooks greatest acquisition.
Three thousand dollars will get you options until 2020 that you can cash in for $50k worth. You don't need a ton of cash if you think they're going to zero.
hold up, how does that figure? I thought you could only get up to the amount invested back, which is why it is a really not great idea. Investing $3k now might net you up to $3k if the stock hits 0, but it could triple in which case you lose $6k.
Bounded upside, infinite downside. I'm sure it's more complicated but what am I missing?
Options aren't "an investment", think of them more like "gambling". So the 3k is the "fee" (non-refundable), and the "winnings" depend on the price of the stock at a predefined date.
In this case, the parent would buy a put option, which would pay out only if, and proportionally to the amount that, the stock is lower than some predefined price (usually the present price with a small delta).
