Today we are going to get a strong lesson about how options may not price in ‘outlier’ events.
Twitter, as you may know by now, experienced a hack of epic proportions.
The hack may in fact be the worst hack in history.
When I say that I do not contend it was the most people hacked (that might be the ‘I LOVE YOU’ Virus).
It’s not going to be the one that took the most dollars, recall the ‘Prodeum’ scam from a couple of years ago.
But what is the biggest hack is WHO was hacked.
The answer is just about EVERYONE who is ‘verified’ by Twitter.
Hackers…potentially with the unwitting…
..or worse…WITTING help of a Twitter employee gained backdoor access to EVERY VERIFIED ACCOUNT ON TWITTER.
Now they, I am sure, did not manage to actually GET into the accounts of each one…yet.
But if they ran some sort of information scraping software (which I would do if I was going to hack every famous person on Twitter)…
They could have access to DM’s, personal emails, all hosts of information.
Twitter, heading into Friday’s expiration, was pricing in about $1.20 of movement (based on the 35.50-36 strangle price).
Given this hack…
How much is Twitter going to be down tomorrow?
These hackers might have the DM’s of Elon Musk, Bill Gates, Jeff Bezos…President Obama…Joe Biden…
The list goes on and on.
This is why, and I’ll say this one more time…CLOSE WORTHLESS OPTIONS.
Every option expiring on Friday more than 2 dollars away from the closing stock price is worth .10 or less.
How much do you think the person that was short the 33 puts worth .06 wishes they closed them today?
Your Only Option,
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