Author Topic: Hypothetical moonshot game  (Read 1640 times)

ChpBstrd

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Hypothetical moonshot game
« on: September 14, 2020, 11:53:08 AM »
Imagine you are diagnosed with a disease that will result in your death unless you cough up $1M within the next 6 months.
 

You have $700k today.
There are zero other options besides paying the $1M. The treatment is unavailable in any other country or from any other source, for example. There is no charitable program, safety net, insurance, etc.
You must pay for the treatment by March 15 or the disease will become untreatable on that day and you'll die after a couple of more months of agony.
Odds of death are 100% within 3 months of March 15 unless you pay.
Odds of survival are 100% if you pay.
You have access to all the same investments/financial instruments as you do in real life.
You can save up to $15k from work in those 6 mos. UNLESS you choose non-passive investments (e.g. property flips).
[edit] Given your health, no one will loan you money. (unless you extract funds from the sale of obligations not expiring after March, such as certain options strategies).

How would you invest/gamble your $700k so that your odds of gaining 43% are highest?

The goal is to share information about risk, leverage, and financial instruments or ideas for our speculative asset allocations. It's also good morbid fun. We'll see who lived and who died in 6 months!
« Last Edit: September 14, 2020, 01:52:38 PM by ChpBstrd »

ctuser1

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Re: Hypothetical moonshot game
« Reply #1 on: September 14, 2020, 12:22:40 PM »
From the setup, it appears to me that gaining only 40% is the same as losing 100% (i.e. both are equally useless).
-> Asset protection does not matter.

If so, I'd go with LEAPS (https://en.wikipedia.org/wiki/LEAPS_(finance))  on tech names that have imminent catalysts AND that have not run up to absurd levels of PE already.

What are such tech names?

1. MU
Coming out on the other side of the latest memory price downward cycle.

2. AAPL
5G phone. No practical benefit yet - but expect a lot of commentary around the release of next iphone that will be 5G. They will focus on the total 5G ecosystem value that will be created in the next 15 years and how AAPL is well positioned to take huge advantage of that.

3. INTC
It's too much in the value territory driven by negative sentiment. Any positive spin will allow it to bounce off nicely from current levels.

I hold all three. MU is the first single-name position I initiated after 2013, from money freed up by selling other positions (XOM/IBM etc) that I don't see much future potential in.

I looked for pharma names that will likely benefit from COVID vaccine announcements that will come later this year and early next - but could not figure out who would really benefit. Perhaps someone less ignorant on the pharma industry than I can give some names from that side.

I don't think the chances of 43% gain will be very high doing the above. I just can't think of any other approach that will increase the probability.

v8rx7guy

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Re: Hypothetical moonshot game
« Reply #2 on: September 14, 2020, 12:47:47 PM »
Maybe I've been watching too much HGTV, but flipping one or two homes in a fast growing area would be the tempting option.

I'd also be tempted to do a roulette spin at a high stakes casino (maybe bacarat or craps pass line are better odds?) and put $500K on a color or near 50/50 2:1 bet of choice.  If you win, you have your $1M, and you don't have to worry about it.  This, to me, seems like the best chances of precisely getting the amount of money you need without under shooting (not taking on enough risk) or over shooting (taking on too much risk) your target.  If you lose, you still have $200K and  6 months for some sort of a desperation move to turn 5X that investment.  You could maybe do another spin with 28.6K on 7 numbers of your choice.  Maybe try to find some surplus stock of something you can sell for 5X your investment.  Maybe put in all in some penny stock.

Editing to add: You could also potentially try to get a TV deal with your dramatic story and putting all your money on the line to save your life by putting $500K on black.  Half of America tunes in to see whether you hit it or not and advertising slots sell for millions of dollars like it's the Super Bowl.  It's possible that investing in this story could pay off $1M whether you win or lose at the table.  Is this cheating?
« Last Edit: September 14, 2020, 12:56:36 PM by v8rx7guy »

vand

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Re: Hypothetical moonshot game
« Reply #3 on: September 14, 2020, 01:01:21 PM »
This is easy. Find sport event with a 70/30 winner/loser market like a tennis match. Lump everything on the fav. If you win then you get your $1m. If you lose it doesn't matter as you're dead in a few montha anyway.

theoverlook

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Re: Hypothetical moonshot game
« Reply #4 on: September 14, 2020, 01:29:01 PM »
I hate to be the boring one, but with $700k in cash and a continuing income stream I'm sure I could get a $300k loan.  Just borrow $300k, pay for the procedure, and pay off the $300k asap.

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #5 on: September 14, 2020, 01:51:04 PM »
The options idea would have certainly worked over the past few months. Because options are brutally efficient, we can assume the odds we sign up for when we buy a call. I.e. if they were binary, to earn 43% you'd have to accept about a 43% risk of complete loss. In real life, there is a scale of possible future values so it's a little more complicated. But the expected value still adds up to zero. Can we do better than zero?

I'm highly skeptical of HGTV-style six-figure renovation profits where contractors do all the work. It's as if the contractors aren't smart enough to bid up the prices of the properties themselves, or the sellers aren't smart enough to earn a profit by taking out a construction loan, and so there are all these below-market-price opportunities sitting around where one can earn tens/hundreds of thousands of dollars with some phone calls and talking while waving hands around. In my area, I find that real estate in desperate need of a remodel still has more value than the fixed up version minus costs. That's because there is always someone looking for a bargain that is willing to live with whatever - no matter how bad it is.

The casino and sports gambling ideas are interesting. However, with the bookie's cut these have a negative expected value (Roulette is the most efficient game I believe, with about a 2% house edge). Still, these are good last-resort attempts for the person who hasn't yet won by March 14 and still has some assets to gamble. I certainly wouldn't play at the casino on day 1 of the game, but I might on the very last day. Interesting side note: the presence of the gambling option tilts the strategy toward investments where, if you lose, there is still residual value that can be gambled at the end. I.e. If I put my whole portfolio into an options strategy and it goes to zero, I don't get to bet on red right before the end of the game and enjoy a new 48% chance of survival. If I put it all in Tesla and Tesla goes down 50%, I still get to sell in March and then play roulette for my life.   

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #6 on: September 14, 2020, 01:51:25 PM »
I hate to be the boring one, but with $700k in cash and a continuing income stream I'm sure I could get a $300k loan.  Just borrow $300k, pay for the procedure, and pay off the $300k asap.

The rule I missed! Fixed.

v8rx7guy

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Re: Hypothetical moonshot game
« Reply #7 on: September 14, 2020, 02:21:48 PM »
Another option might be what I've heard called a "waffle" on Facebook.  It's basically a raffle where there are a set number of spots that any person can buy however many spots they want for a chance to win the grand prize.   Usually you receive a sticker or whatever for you spot so you are legally "receiving" something for your $100.  These are all over the place and it seems from a distance that people can make 2X whatever they are waffling.  So for instance I have seen guys waffle their $10,000 value car for $100 a spot, 200 spots... and they'll fill every spot before raffling it.  If you could set up maybe 3 waffles with $100K being the prize, selling 2000 spots @ $100 a piece, could you find 6000 people willing to give you $100 for a .05% chance for $100K?  Basically setting up your own mini lottery... you could probably make it work?  Especially if it felt like a charity for someone who could die?
« Last Edit: September 14, 2020, 02:25:28 PM by v8rx7guy »

Financial.Velociraptor

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Re: Hypothetical moonshot game
« Reply #8 on: September 14, 2020, 04:20:03 PM »
Assuming the game rules, asset protection is meaningless.  You need an all or nothing gamble.  A penny shy you are dead, lose all 700k you are just as dead.

For this, I'd use a strategy called a Bull Call Spread that I usually do with small allocations.  You want a stock that is likely to rise a few % or so before the deadline and leverage the crap out of that gain.

Look at Amazon - https://finance.yahoo.com/quote/AMZN/options?p=AMZN&date=1613692800

With shares at 3,102 you could open the 3100/3120 bull call spread by buying 3100 calls and selling 3120 calls at the 19FEB2020 expiry.  This spread will cost you about 12 dollars a share.  Should shares finish above 3120, you will collect 20 dollars a share on 12 at risk.  Or about 83% before commissions.  If shares finish below 3100, you lose EVERYTHING.

So, if in a few months AMZN is at least 0.58% higher you live.  If it is 0.06% you are both dead and penniless. 

I usually use this strategy with the strikes in the money for some downside protection and will small allocation.  I will close early when the spread is down 50%.  I find you can often make impressive returns over short time spans of course with a lot of risk.  I'll be posting on my blog after this about today's bull call spread trade in KO among other trades after this.

JAYSLOL

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Re: Hypothetical moonshot game
« Reply #9 on: September 14, 2020, 04:53:58 PM »
Yeah, in all honesty Iíd probably try gambling most of it on something like roulette, if that didnít work, Iíd spend the rest on lotto tickets, and if (when) that fails Iíd find the least ugly rich person willing to marry me and pay for the procedure

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #10 on: September 15, 2020, 12:52:42 PM »
Assuming the game rules, asset protection is meaningless.  You need an all or nothing gamble.  A penny shy you are dead, lose all 700k you are just as dead.

For this, I'd use a strategy called a Bull Call Spread that I usually do with small allocations.  You want a stock that is likely to rise a few % or so before the deadline and leverage the crap out of that gain.

Look at Amazon - https://finance.yahoo.com/quote/AMZN/options?p=AMZN&date=1613692800

With shares at 3,102 you could open the 3100/3120 bull call spread by buying 3100 calls and selling 3120 calls at the 19FEB2020 expiry.  This spread will cost you about 12 dollars a share.  Should shares finish above 3120, you will collect 20 dollars a share on 12 at risk.  Or about 83% before commissions.  If shares finish below 3100, you lose EVERYTHING.

So, if in a few months AMZN is at least 0.58% higher you live.  If it is 0.06% you are both dead and penniless. 

I usually use this strategy with the strikes in the money for some downside protection and will small allocation.  I will close early when the spread is down 50%.  I find you can often make impressive returns over short time spans of course with a lot of risk.  I'll be posting on my blog after this about today's bull call spread trade in KO among other trades after this.

Why swing for the fences with a spread earning (8/20= ) 67% when all you need to survive is 43%? Seems like one could drop down the strike prices and shave off some risk. Nonetheless, I like this idea.

swashbucklinstache

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Re: Hypothetical moonshot game
« Reply #11 on: September 15, 2020, 02:32:57 PM »
Some thoughts from me on a similar thing here, though longer odds and longer timeline (1 year). Included is a link to another similar conversation about OMY when you only need maybe 0.5MY but want to commit to 0 or 1 MY, not 0.5.
https://forum.mrmoneymustache.com/ask-a-mustachian/best-long-odds-on-a-single-bet-for-charity!/msg2642952/#msg2642952
^ never got much traction, and I don't know anything about options, but was a fun thought exercise from my real (future) life that led to a few ideas thrown out there. Fun to note that if I had enacted one of these strategies on the actual day I posted I would have indeed turned 50k into > 1.5 million overnight..

A thing to consider is (do?) you need to care about after-tax returns. For instance, I think your gambling winnings are going to be taxed differently than long term capital gains..

For me, I might throw in that I'd rather slightly less good odds that retain some longshot odds through multiple trials, as someone mentioned above, rather than the best odds in a 1 shot deal. I guess I mean that I'd rather make a slightly sub-optimal bet up front, lose, then live my remaining days knowing I've still got a 2.x% shot on my last day as opposed to 90 days of dread.
« Last Edit: September 16, 2020, 02:53:04 PM by swashbucklinstache »

ctuser1

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Re: Hypothetical moonshot game
« Reply #12 on: September 15, 2020, 02:51:43 PM »
Assuming the game rules, asset protection is meaningless.  You need an all or nothing gamble.  A penny shy you are dead, lose all 700k you are just as dead.

For this, I'd use a strategy called a Bull Call Spread that I usually do with small allocations.  You want a stock that is likely to rise a few % or so before the deadline and leverage the crap out of that gain.

Look at Amazon - https://finance.yahoo.com/quote/AMZN/options?p=AMZN&date=1613692800

With shares at 3,102 you could open the 3100/3120 bull call spread by buying 3100 calls and selling 3120 calls at the 19FEB2020 expiry.  This spread will cost you about 12 dollars a share.  Should shares finish above 3120, you will collect 20 dollars a share on 12 at risk.  Or about 83% before commissions.  If shares finish below 3100, you lose EVERYTHING.

So, if in a few months AMZN is at least 0.58% higher you live.  If it is 0.06% you are both dead and penniless. 

I usually use this strategy with the strikes in the money for some downside protection and will small allocation.  I will close early when the spread is down 50%.  I find you can often make impressive returns over short time spans of course with a lot of risk.  I'll be posting on my blog after this about today's bull call spread trade in KO among other trades after this.

Why swing for the fences with a spread earning (8/20= ) 67% when all you need to survive is 43%? Seems like one could drop down the strike prices and shave off some risk. Nonetheless, I like this idea.

Taxes??

You need to worry about them if you survive, isn't it?

Financial.Velociraptor

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Re: Hypothetical moonshot game
« Reply #13 on: September 15, 2020, 03:00:24 PM »
Assuming the game rules, asset protection is meaningless.  You need an all or nothing gamble.  A penny shy you are dead, lose all 700k you are just as dead.

For this, I'd use a strategy called a Bull Call Spread that I usually do with small allocations.  You want a stock that is likely to rise a few % or so before the deadline and leverage the crap out of that gain.

Look at Amazon - https://finance.yahoo.com/quote/AMZN/options?p=AMZN&date=1613692800

With shares at 3,102 you could open the 3100/3120 bull call spread by buying 3100 calls and selling 3120 calls at the 19FEB2020 expiry.  This spread will cost you about 12 dollars a share.  Should shares finish above 3120, you will collect 20 dollars a share on 12 at risk.  Or about 83% before commissions.  If shares finish below 3100, you lose EVERYTHING.

So, if in a few months AMZN is at least 0.58% higher you live.  If it is 0.06% you are both dead and penniless. 

I usually use this strategy with the strikes in the money for some downside protection and will small allocation.  I will close early when the spread is down 50%.  I find you can often make impressive returns over short time spans of course with a lot of risk.  I'll be posting on my blog after this about today's bull call spread trade in KO among other trades after this.

Why swing for the fences with a spread earning (8/20= ) 67% when all you need to survive is 43%? Seems like one could drop down the strike prices and shave off some risk. Nonetheless, I like this idea.

Taxes??

You need to worry about them if you survive, isn't it?

It was my first thought.  You could also drop the strikes for downside protection but lever up with a margin loan of 25%.  I briefly considered taxes but if I was in the scenario posted, I'd worry about surviving first and how to pay the tax man later.  They usually don't put you in prison if you make a good faith effort to get on a payment plan.  And even federal prison is better than dead.

bthewalls

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Re: Hypothetical moonshot game
« Reply #14 on: September 15, 2020, 03:05:37 PM »
Buy property with 700k....insure for 1mill after a legally binding valuation is done

Have it Ďprofessionallyí burned to the ground.

Just to make it convincing leave a pet inside...or a mother in law...

Buffaloski Boris

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Re: Hypothetical moonshot game
« Reply #15 on: September 15, 2020, 07:08:47 PM »
Start a FIRE blog. Regale people with my tales of fashionable travel and how I retired at the age of 17 from my tedious STEM career. Write a book, start a YouTube channel, do shameful amounts of affiliate marketing. Should be easy to hit the target amount before I keel over.

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #16 on: September 16, 2020, 10:09:49 AM »
Letís say tax obligations donít matter for the reasons @Financial.Velociraptor points out. I said no loans because it muddies everything. For example, someone could say just borrow $100M and earn 0.5% more than the interest rate - so simple! That doesnít actually teach anyone anything unless you know of someone willing to lend me millions dirt cheap. However, worrying about taxes does not make sense in the narrative of the game. We could calculate the PV of future tax obligations and subtract them from returns, but it just doesnít make sense that one would prioritize Uncle Sam over surviving.

Retire-Canada

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Re: Hypothetical moonshot game
« Reply #17 on: September 16, 2020, 10:13:04 AM »
I'd give my GF the $700K and tell her to FAT-FIRE! I'd rather she has solid retirement than I potentially blow my life savings in search of a cure. I've had 50+ awesome years on the planet. I've already won the life game.

J Boogie

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Re: Hypothetical moonshot game
« Reply #18 on: September 16, 2020, 10:13:41 AM »
Cel-Sci, or CVM.

They will skyrocket if their long awaited Multikine study results show some effectiveness.

They are about to datalock and from there it will be 6-18 months before the study is complete, longer if negative and shorter if positive.

I personally have about 8k invested as I want some exposure to multibaggers just in case they pan out.


swashbucklinstache

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Re: Hypothetical moonshot game
« Reply #19 on: September 16, 2020, 11:49:31 AM »
Letís say tax obligations donít matter for the reasons @Financial.Velociraptor points out. I said no loans because it muddies everything. For example, someone could say just borrow $100M and earn 0.5% more than the interest rate - so simple! That doesnít actually teach anyone anything unless you know of someone willing to lend me millions dirt cheap. However, worrying about taxes does not make sense in the narrative of the game. We could calculate the PV of future tax obligations and subtract them from returns, but it just doesnít make sense that one would prioritize Uncle Sam over surviving.
In that case I'm definitely going with sports betting and picking a middling team to win the super bowl. Something to cheer for all season long! =)

vand

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Re: Hypothetical moonshot game
« Reply #20 on: September 16, 2020, 12:37:01 PM »
Letís say tax obligations donít matter for the reasons @Financial.Velociraptor points out. I said no loans because it muddies everything. For example, someone could say just borrow $100M and earn 0.5% more than the interest rate - so simple! That doesnít actually teach anyone anything unless you know of someone willing to lend me millions dirt cheap. However, worrying about taxes does not make sense in the narrative of the game. We could calculate the PV of future tax obligations and subtract them from returns, but it just doesnít make sense that one would prioritize Uncle Sam over surviving.
In that case I'm definitely going with sports betting and picking a middling team to win the super bowl. Something to cheer for all season long! =)

I'd do it the opposite way. Find an likely outcome that you really can't stand and put your money on it. Could be you can't stand the thought of Biden winning the election; in which case as the current warm fav you should back him. If he wins then at least you get to live. If he loses they hey at least you die knowing that it didn't happen.

Betting against your team is not an uncommon thing in sports betting.. if it's an important game that you really want you team to win like they've made it to the cup final, betting against them at least provides some tangible consolation if it doesn't happen.

celerystalks

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Re: Hypothetical moonshot game
« Reply #21 on: September 16, 2020, 12:57:13 PM »
300k on red.

If It lands on black or 0/00, take the remaining 400k and enjoy the next six months.


ChpBstrd

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Re: Hypothetical moonshot game
« Reply #22 on: September 16, 2020, 03:03:15 PM »
300k on red.

If It lands on black or 0/00, take the remaining 400k and enjoy the next six months.

I think if our lives were really at stake, we'd be thinking a little bit harder rather than just consigning ourselves to a roulette spin. E.g. what product could we sell on Amazon for a 43% markup? What string of probabilities in the options universe would allow us to either win or try again with longer odds? How many stocks have put options that if rolled monthly without a correction would lead to a 43% payoff in 6 months, and would allow us to sell calls if assigned?

Here are my top ideas, in no particular order. I'll have to pick one or allocate amongst them to play the game obviously, but for now I'm taking a minute to think:

1) Bull Put Spread on the VIX - a bet on chaos around the election:
Sell to Open: Nov 17 2020 $25 Put for 1.65
Buy to Open: Nov 17 2020 $24 Put for 1.25
Net credit: $0.43
At risk: $1.00
If VIX (currently 26.16) is more than 24 on Nov. 17 this spread would be worth $0 and I would keep the $0.43 I collected and survive. If VIX ends up somewhere between 24 and 25, my return is (FutureVIX - 25 + 0.43). If VIX goes below 24, I lose everything and resort to a brief crime spree.

2) Bull Put Spread on AAPL (currently 112.25) - basically "Apple will be fine and the tech bubble still has room to inflate"
Sell to Open: Jan 15, 2021 107.5 Put
Buy to Open: Jan 15, 2021 102.5 Put
Net credit: $2.15
At risk: $5.00
If AAPL does not fall by at least 4.23% in the next four months, I keep my $2.15 credit and survive. If it goes between 102.5 and 107.5, my return is (FutureAAPL - 107.5 + 2.15). If AAPL goes below 102.5, I lose everything and resort to a brief crime spree.

3) Calls to sell on vaccine announcement day:
Allocate 25% of my portfolio to each of the following, attempting not to move the prices too much:
Buy to Open: Royal Caribbean (RCL) Mar 18, 2021 80 Call for $11.48
Buy to Open: American Airlines (AAL) Feb 18, 2021 15 Call for $2.59
Buy to Open: Dave & Busters (DAVE) Jan 14, 2021 20 Call for $3.75
Buy to Open: Darden Restaurants (DRI) Jan 14, 2021 100 Call for $8.10
This portfolio is either going to the moon or crashing hard, like the others. There would be no replay unless I sold the RCL calls a couple of days before the game ended and had a few bucks I could bet at the roulette table, hoping for a highly unlikely winning streak. By January, I would know if I needed to resort to crime.


vand

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Re: Hypothetical moonshot game
« Reply #23 on: September 17, 2020, 01:51:03 AM »
300k on red.

If It lands on black or 0/00, take the remaining 400k and enjoy the next six months.

I think if our lives were really at stake, we'd be thinking a little bit harder rather than just consigning ourselves to a roulette spin. E.g. what product could we sell on Amazon for a 43% markup? What string of probabilities in the options universe would allow us to either win or try again with longer odds? How many stocks have put options that if rolled monthly without a correction would lead to a 43% payoff in 6 months, and would allow us to sell calls if assigned?

Here are my top ideas, in no particular order. I'll have to pick one or allocate amongst them to play the game obviously, but for now I'm taking a minute to think:

1) Bull Put Spread on the VIX - a bet on chaos around the election:
Sell to Open: Nov 17 2020 $25 Put for 1.65
Buy to Open: Nov 17 2020 $24 Put for 1.25
Net credit: $0.43
At risk: $1.00
If VIX (currently 26.16) is more than 24 on Nov. 17 this spread would be worth $0 and I would keep the $0.43 I collected and survive. If VIX ends up somewhere between 24 and 25, my return is (FutureVIX - 25 + 0.43). If VIX goes below 24, I lose everything and resort to a brief crime spree.

2) Bull Put Spread on AAPL (currently 112.25) - basically "Apple will be fine and the tech bubble still has room to inflate"
Sell to Open: Jan 15, 2021 107.5 Put
Buy to Open: Jan 15, 2021 102.5 Put
Net credit: $2.15
At risk: $5.00
If AAPL does not fall by at least 4.23% in the next four months, I keep my $2.15 credit and survive. If it goes between 102.5 and 107.5, my return is (FutureAAPL - 107.5 + 2.15). If AAPL goes below 102.5, I lose everything and resort to a brief crime spree.

3) Calls to sell on vaccine announcement day:
Allocate 25% of my portfolio to each of the following, attempting not to move the prices too much:
Buy to Open: Royal Caribbean (RCL) Mar 18, 2021 80 Call for $11.48
Buy to Open: American Airlines (AAL) Feb 18, 2021 15 Call for $2.59
Buy to Open: Dave & Busters (DAVE) Jan 14, 2021 20 Call for $3.75
Buy to Open: Darden Restaurants (DRI) Jan 14, 2021 100 Call for $8.10
This portfolio is either going to the moon or crashing hard, like the others. There would be no replay unless I sold the RCL calls a couple of days before the game ended and had a few bucks I could bet at the roulette table, hoping for a highly unlikely winning streak. By January, I would know if I needed to resort to crime.

Disagree. This is not a "how to make money in the markets" question. You can't outthink the market in this or any other scenario, and people looking at the problem that way are simply showing their lack of imagination.

This is an all-or-nothing proposal. You want the course of action that give you the highest total probability of returning $300,000 in a universe of outcomes where falling short by 1 cent is as good as falling short by -$700k.

This outcome is done with the single lowest risk/highest probability event you can find. Money management doesn't matter here. You plonk ALL your money down in one go to keep the house edge as low as possible. If you spread it around all you are doing is multiplying the house edge over the number of betting events. Incidentally, professional gamblers implicitly understand how to do this - they find events that have a positive expectancy and then multiply them together to create a much large overall edge.

But just by taking the single bet option you have a 70% chance of living and a 30% chance of dying if you do this.

Do you know how many daytraders would lose money if we gave them a $700k starting bank, never mind "fail to make $300k in 3 months" ? It's would be much, much higher than 30%.
« Last Edit: September 17, 2020, 01:59:31 AM by vand »

mrmoonymartian

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Re: Hypothetical moonshot game
« Reply #24 on: September 17, 2020, 01:58:25 AM »
Geo-arb. Go to Thailand, get treatment for half the cost. Have a nice holiday at the same time.


Edit: I see you said you can't do that in the OP. Well, shucks. Guess you'll just have to rob a bank or sell some acquaintances into slavery.
« Last Edit: September 17, 2020, 02:05:42 AM by mrmoonymartian »

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #25 on: September 17, 2020, 08:05:20 AM »
Geo-arb. Go to Thailand, get treatment for half the cost. Have a nice holiday at the same time.


Edit: I see you said you can't do that in the OP. Well, shucks. Guess you'll just have to rob a bank or sell some acquaintances into slavery.

Yes, this specific scenario is obviously written from a US perspective. Substitute "owe the mafia" or "been sentenced in Saudi Arabia to either a $1M fine or beheading" if my scenario seems too alien.

Side note. There is a curious lack of healthcare travel agencies in the U.S. despite the fact that healthcare costs 4x or more what it costs in other countries, healthcare expenses are a top cause of bankruptcy here, and people routinely die if they don't have a big pile of cash or if their insurance company can wiggle out of paying through some contractual clause. Somebody needs to start this business.

ctuser1

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Re: Hypothetical moonshot game
« Reply #26 on: September 18, 2020, 12:48:22 PM »
Side note. There is a curious lack of healthcare travel agencies in the U.S. despite the fact that healthcare costs 4x or more what it costs in other countries, healthcare expenses are a top cause of bankruptcy here, and people routinely die if they don't have a big pile of cash or if their insurance company can wiggle out of paying through some contractual clause. Somebody needs to start this business.

Legal liability!! That's going to kill you if you start it the first time something goes bad (and it will!).

Stachless

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Re: Hypothetical moonshot game
« Reply #27 on: September 23, 2020, 10:00:05 PM »
Harder to do in these internet days, but it is still possible.  Find a sports bet that has a decent variance between from two books, i.e. Raiders vs. Saints has over/under of 51 at Caesars and o/u of 53 at Sands.  Bet the over on the lower line, bet the under on the higher line, and hope it splits the middle and collect on both.  If first try doesn't work, you only lost the vig so keep on trying!

vand

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Re: Hypothetical moonshot game
« Reply #28 on: September 24, 2020, 03:36:45 AM »
Harder to do in these internet days, but it is still possible.  Find a sports bet that has a decent variance between from two books, i.e. Raiders vs. Saints has over/under of 51 at Caesars and o/u of 53 at Sands.  Bet the over on the lower line, bet the under on the higher line, and hope it splits the middle and collect on both.  If first try doesn't work, you only lost the vig so keep on trying!

Yes, an arb.. basically a bookie that is offering better than true value odds. You can make good money this way, especially if you have access to a betting exchange and can hedge your bet for a guaranteed payout and so can lump on a lot of money without worrying about variance. 

However bookmakers are also known to often welch on paying out on such bets, reducing the payout, or worse, voiding the bet.

Steeze

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Re: Hypothetical moonshot game
« Reply #29 on: September 27, 2020, 07:43:45 PM »
Buy 20 kilos of coke for $25k each. Sell grams for $50.

You have around 6 months so you need to sell 10-20 grams a day. Maybe you need 100 repeat clients for that. Could probably be done in a medium sized college town pretty easy without causing to much commotion.

Worst case scenario you end up in jail for a couple months.

theoverlook

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Re: Hypothetical moonshot game
« Reply #30 on: September 28, 2020, 07:57:25 AM »
Worst case scenario you end up in jail for a couple months.
And then they'd be required to provide your health care, so mission accomplished!

vand

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Re: Hypothetical moonshot game
« Reply #31 on: September 28, 2020, 08:08:19 AM »
Buy 20 kilos of coke for $25k each. Sell grams for $50.

You have around 6 months so you need to sell 10-20 grams a day. Maybe you need 100 repeat clients for that. Could probably be done in a medium sized college town pretty easy without causing to much commotion.

Worst case scenario you end up in jail for a couple months.

Tax free, too. I like you thinking.

Retire-Canada

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Re: Hypothetical moonshot game
« Reply #32 on: September 28, 2020, 09:41:27 AM »
Tax free, too. I like you thinking.

Well to be fair you may well have to pay tax to a muscular gentleman with a nice leather coat. Hopefully in cash and without him having to break your legs as a "late payment"penalty.

ChpBstrd

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Re: Hypothetical moonshot game
« Reply #33 on: September 30, 2020, 03:55:53 PM »
300k on red.

If It lands on black or 0/00, take the remaining 400k and enjoy the next six months.

I think if our lives were really at stake, we'd be thinking a little bit harder rather than just consigning ourselves to a roulette spin. E.g. what product could we sell on Amazon for a 43% markup? What string of probabilities in the options universe would allow us to either win or try again with longer odds? How many stocks have put options that if rolled monthly without a correction would lead to a 43% payoff in 6 months, and would allow us to sell calls if assigned?

Here are my top ideas, in no particular order. I'll have to pick one or allocate amongst them to play the game obviously, but for now I'm taking a minute to think:

1) Bull Put Spread on the VIX - a bet on chaos around the election:
Sell to Open: Nov 17 2020 $25 Put for 1.65
Buy to Open: Nov 17 2020 $24 Put for 1.25
Net credit: $0.43
At risk: $1.00
If VIX (currently 26.16) is more than 24 on Nov. 17 this spread would be worth $0 and I would keep the $0.43 I collected and survive. If VIX ends up somewhere between 24 and 25, my return is (FutureVIX - 25 + 0.43). If VIX goes below 24, I lose everything and resort to a brief crime spree.

2) Bull Put Spread on AAPL (currently 112.25) - basically "Apple will be fine and the tech bubble still has room to inflate"
Sell to Open: Jan 15, 2021 107.5 Put
Buy to Open: Jan 15, 2021 102.5 Put
Net credit: $2.15
At risk: $5.00
If AAPL does not fall by at least 4.23% in the next four months, I keep my $2.15 credit and survive. If it goes between 102.5 and 107.5, my return is (FutureAAPL - 107.5 + 2.15). If AAPL goes below 102.5, I lose everything and resort to a brief crime spree.

3) Calls to sell on vaccine announcement day:
Allocate 25% of my portfolio to each of the following, attempting not to move the prices too much:
Buy to Open: Royal Caribbean (RCL) Mar 18, 2021 80 Call for $11.48
Buy to Open: American Airlines (AAL) Feb 18, 2021 15 Call for $2.59
Buy to Open: Dave & Busters (DAVE) Jan 14, 2021 20 Call for $3.75
Buy to Open: Darden Restaurants (DRI) Jan 14, 2021 100 Call for $8.10
This portfolio is either going to the moon or crashing hard, like the others. There would be no replay unless I sold the RCL calls a couple of days before the game ended and had a few bucks I could bet at the roulette table, hoping for a highly unlikely winning streak. By January, I would know if I needed to resort to crime.

All right, I said I'd commit so here it is. I'm going with strategy #2 above. The numbers have changed since then so here's what I'm hypothetically buying with my full portfolio. Wish me luck!

2) Bull Put Spread on AAPL (currently 115.57)
Sell to Open: Jan 15, 2021 112.5 Put
Buy to Open: Jan 15, 2021 107.5 Put
Net credit: $2.17
At risk: $5.00 (43.4% return)
If AAPL does not fall by at least 7% in the next 3.5 months, I keep my $2.17 credit and survive.

Wish me hypothetical luck!

bthewalls

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Re: Hypothetical moonshot game
« Reply #34 on: September 30, 2020, 04:02:03 PM »
Buy 20 kilos of coke for $25k each. Sell grams for $50.

You have around 6 months so you need to sell 10-20 grams a day. Maybe you need 100 repeat clients for that. Could probably be done in a medium sized college town pretty easy without causing to much commotion.

Worst case scenario you end up in jail for a couple months.

Tax free, too. I like you thinking.

Actually why are we wasting our timing indexing and NOT DOONG THIS! WWAAAHHH