Weekly IQ test

Quote from stock777:

Would you rather have shorted LVS from 150 to 1.50 or bought it at 1.50 and rode it to 55?
More...

shorted.

PS: you failed to indicate the time frame, which I think you assumed is the same for both alternatives, but I wonder if you realized the importance of time.
 
Strictly based on the numbers, I'd have to say $1.50 to $55 based on capital outlay and risk-reward.

Equal shares comparison:
A) 1000 @ $1.50 = Risk $1500, Reward = $53500.
B) 1000 @ $150 = Risk $150k, Reward = $148.5k

Equal dollar comparison:
A) $1500 gets you 1000 shares at $1.50 with the same net ($53.5k)
B) $1500 gets you 10 shares at $150, with a net of $1485.

However, this question is a bit loaded, since there is no scenario information, etc. Also, $1.50 price tags fall under my radar as things are usually that cheap for a reason.
 
Quote from tradingjournals:

shorted.
More...

Nope,

Long from 1.50, without even a doubt. It's all about return on your capital. Do some basic math and see how much money you would make on the first versus the second trade with $15,000.
 
i would've longed simply because you can only lose 1.50 per share on the long side if all hell broke loose but when you short there's technically an unlimited risk
 
Quote from TheGoonior:

Strictly based on the numbers, I'd have to say $1.50 to $55 based on capital outlay and risk-reward.

Equal shares comparison:
A) 1000 @ $1.50 = Risk $1500, Reward = $53500.
B) 1000 @ $150 = Risk $150k, Reward = $148.5k

Equal dollar comparison:
A) $1500 gets you 1000 shares at $1.50 with the same net ($53.5k)
B) $1500 gets you 10 shares at $150, with a net of $1485.

However, this question is a bit loaded, since there is no scenario information, etc. Also, $1.50 price tags fall under my radar as things are usually that cheap for a reason.
More...

are we learning ABC's now?
 
You must log in or register to reply here.
Back
Top