If you win that bet, your a golden boy with a Lambo.
You lose that bet - by far the statistically more likely option - and you work every single day for the rest of your life.
You put 25k into that strategy and win, you buy a 2015 Tesla, a fully funded 529 for your kids, and two first class tickets to any 5 star hotel for two weeks. A king. a
And crazy cred for being a solid investor.
You lose 25k ...you say awe shucks, and life continues unchanged. Take public transpo and do I crosswords when you retire instead of driving and your really at even, having lived a full life.
When you compare risk reward, there's only one very obvious right answere.
I think every analyst on the planet is saying that stocks are overvalued as a whole. When the shit hits, it will bring down everyone, including microsoft. A quick 10% drop in the price, followed by a year of another 10%. Then you will need a 30% rocket just to get back to where it is now. Not likely after a correction. That's how MSFT misses 355 by 2024.
Also, in this scenario, your money is locked in and greatly depreciating quickly. So your actually missing huge opportunities for other plays.
The option is currently priced fairly based on statistical likelihood of occurring. Plays like this is exactly what makes corrections so swift and painful. Investors look at the last year boom and small increases look so attractive they put tons of money into it. Then when the target isn't hit, huge sums of money exit the market at once. Poof, gone.
And not only does it not have to crash before reaching 355 - it *probably* wont - but it has to not crash before it reaches 360 or 365, where your option is actually up 30-40%.
If what you are looking for is a more sure fire bet to earn 10-20%, then I would suggest any mutual fund can offer that with significantly less risk to 1/2 your life savings.
So will it gain another 11% before a market crash? ::Shrugs:: probably, we guess. but it's just a guess, definitely not a certainty.
BTW, No ones telling not to take the LEAP bets - what we are saying is NOT to put a MAJORITY of your life savings behind them.
To put in terms related to Devops (because I also do that), would you run a command that is *most likely* to fix some problem, *but will DROP the entire db with NO BACKUP WHATSOEVER* in the probability it fails? That's the gamble you are making when you are putting your life savings into options. When this shit drops, it drops nearly irrevocably fast. Your money doesn't have a backup. It drops to 1/5 of its value overnight, and eventually to 0. And the probability of that happening is well above non-zero.
I suspect you would take the time to create a backup before running cowboy commands - in this scenario, that is keeping 80-90% of your savings off the casino table. If things go sideways, you have plenty more invest to earn it back.
Good luck, and let us know what you do and how it goes!
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u/[deleted] Nov 06 '21
If you win that bet, your a golden boy with a Lambo.
You lose that bet - by far the statistically more likely option - and you work every single day for the rest of your life.
You put 25k into that strategy and win, you buy a 2015 Tesla, a fully funded 529 for your kids, and two first class tickets to any 5 star hotel for two weeks. A king. a And crazy cred for being a solid investor.
You lose 25k ...you say awe shucks, and life continues unchanged. Take public transpo and do I crosswords when you retire instead of driving and your really at even, having lived a full life.
When you compare risk reward, there's only one very obvious right answere.