If they took that out as a Put option they were at far less of loss risk, the entity selling the Put would be on the hook for producing the shares to honor the Put at execution. Austin Private Wealth (APW hereafter) is only out the purchase price of the Puts, and given the general low probability of the Stock falling into the execution range they were probably pretty freakin’ cheap.
Where this gets squirrely is the effect on the party putting up the other side of the put. If the horrible case happened and the companies tanked, they would have been forced to go to market to provide the shares for delivery OR produced the shares if they held them. As the fallout of the attempt stands, I’d be all over protesting delivery from standpoint of obvious insider knowledge.
If APW had actually short sold the shares they probably would have been destroyed. In the “Short” you borrow the shares and sell them right then, hoping to be able to buy them back at the subsequently lower price. Very dangerous because the potential gain is finite (stock goes to 0) but the loss potantial is infinite.
The put options were probably in the neighborhood of 1-5% of share price, variability being the expiration time and a slight uptick in a certain number of traders that will always throw a few dollars at something like this just stacking chips on the low probability side of black swan events. AWP is probably out no more than $25M on this, but you can bet your butt that the negative publicity and the scrutiny of the trade down the road is going to cost a couple times that at least, and if there is the stink of direct collusion in there, a noose???
What you said here intrigues me:
I’d be all over protesting delivery from standpoint of obvious insider knowledge.
The reason I'm interested in the stock purchase and manipulation is the money is so big it's likely the "principal" knew when the hit was happening and if he did likely was in on the planning.
Or if he didnt know the details he would know who would know.
This could lead to who did what, when, and where which is what I'm after.
Thanks very much.