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This is just plain rhetoric and has nothing to do with real world trading. Anybody trading options who takes an outright view is doing it wrong (unless they have extremely good reason to do so).

The market is not dumb and prices volatility accordingly (hence a skew).

What you're talking about is a tail event - most sane option strategies protect against tail events (unless you're writing options and not covering your behind).

Most views via options are on spreads or on volatility where the maximum downside is known (in fact, betting in favor of a tail event is an extremely cheap strategy - via a strangle centered around the current spot - the deeply-out-of money options trade near zero while if a tail event does happen, you're entitled to a handsome payout - the max you lose is the amount you paid upfront - which might be as little as a few hundred dollars - essentially it's a lottery).

So even though your underlying stock may fall off a cliff, you wouldn't care if you had a sane option portfolio because what you get paid for is the distance covered by the drunkard - whether he covers it by falling off a cliff or going zig-zag ad infinitum doesn't matter.

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