OK, for those of us who are not traders . . . .
It’s a bet that a stock will go down.
Soros wants to profit as MGM stock went down and he needed the stock to go down before his put options expired in order to make money.
Most of the time one buys a stock thinking it will go up in value. A “put” is some sort of way of betting that the stock will go down, and making money when it goes down. Soros bought these back in June iirc - but not that long ago.
I love a good conspiracy, and as I noted before, why not try to make some money while trying to take down a nation. On the other hand, with all of Soros’ investments, I bet he has millions/billions of “puts” in hundreds/thousands of companies.
Heck - I might have some investments in my IRA that could be traced back to “puts” on MGM. (Stock in Magellen Banks, which as part of it’s portfolio includes the puts.)
Buying puts and calls you pay a premium to sell or buy (respectively) a stock at a strike price agreed upon for a set time period. 1 contract = 100 shares of stock, so 10 puts would be 1000 shares of stock.
Writing puts and calls you receive a premium to buy or sell a stock at a given price, respectively, for a set upon time period.
In buying an option your at risk money is the premium paid. Conversely in writing and option your at risk money is blue sky for calls, and the price of the stock * 100 * contracts.
They all become valueless after the contract date. For buys, if not exercised you lose what you paid. For writes if not exercised you gain what you sold the option at.
These are complex investment hedges and commissions can eat you alive.
Some plays (mainly writing options) you have to be covered. Either owning the stock or having a % of money at risk and subject to margin calls.
I trade opitions. Options are contracts. They are not stocks. Options are leverage. 1 option contract controls 100 stocks.
Most people sell, also called write, options. When you sell an option you immediately recieve a credit. This is called the “premium”.
Let’s say you own a piece of land and someone wants to purchase it. They would put a down payment to hold the property for a certian time period. This is called the contract. The contract will settled on the day of expiration. The seller and buyer may agree to call off the contract any time prior to expiration. The buyer may decide to walk away. If the buyer walks away the seller keeps the premium.
If you buy an option, you must pay tbe premium to the seller. Now you are betting the the price of the stock goes up “call” or down “put” enough to cover the premium and the price of purchase or “strike” price. Most people buy options if they plan on owning the stock.
If a stock is trading at $100 a share you can buy a put option (contract) controlling 100 shares at $80. You must pay the seller a premium for 10% control of the stock for a predetermined timeframe.
If the stock remains above $80 you can end the contract, but lose a portion of your premium or you can let the option expire worthless and lose all of your premium or you may honor the conyract and purchase 100 shares of stock for $8000, plus fees.
Since you now own 100 shares, you can sell 1 option against them. Let’s say you list them for $100 a share. The buyer pays you a premium or down payment. If the stock hits $100 or above by expiration you would keep the premium plus $20 per share or $2000. If the buyer walks away or if the stock doesn’t reach $100 on expiration you keep the premium and the stock. You can do this over and over, which is called a rolling strategy.
90% of options are not exercised. They are either closed prior to expiration or expire worthless. The purpose of selling options is to keep the premium.
I hope this helps.