Taking a Gamble on the Trump Trade
As I dive into the world of high-stakes trading, I’m putting my money where my mouth is. After months of analyzing the Trump trade, I’ve decided to take the plunge and invest in Trump Media and Technology Group (DJT), the company behind the Truth Social app. My bet? That the stock will plummet if Kamala Harris wins the presidential election.
The Options Game
I’m no seasoned trader, but I wanted to get in on the action. I opted for an options contract, a timed bet that allows me to buy or sell shares in the future at a certain price by a certain deadline. With the guidance of Eric Hale, founder and CEO of Trader Oasis, I navigated the process. Hale emphasized that option betting comes with a binary outcome: I’ll either make a one-time profit or lose my investment completely.
Reading the Polls
I’m taking the polls at face value, with Trump and Harris neck and neck. Without any inside information, I’m not convinced either way. However, I do think betting markets are overstating Trump’s odds, and traders are placing too much emphasis on bullish signals. This could be a false signal.
The Betting Markets
Jim Bianco of Bianco Research explained that betting markets work differently than polls. A 60% chance of Trump winning doesn’t mean he’s got a huge lead; it’s more like a toss-up. Yet, investors in DJT are acting like the race is a done deal. If Trump loses, Truth Social’s chances of success dwindle. But if he wins, the app could become a hub for Trump enthusiasts.
My Trade
I bought a put contract with a strike price of $25, expiring on November 15, 2024. The price? $3.90 per share, or $390 in total. If DJT stays above $25, I’ll lose my investment. But if it falls below, I’ll be “in the money.” My break-even point is $21.10, and my potential gains increase as the price drops.
A Risky Business
I’ve had my fair share of failed bets. In 2021, I lost $1,760 on a meme stock trading venture. In 2017, I bought shares of Fannie Mae, hoping for a Trump administration-led privatization. Instead, the stock tanked. This time, I’m staking my bet on Harris winning and Trump losing. If I’m wrong, Trump fans can revel in my misfortune. But if I’m right, I’ll try to be gracious about it.
Stay tuned for the outcome of my Trump trade. Will I emerge victorious, or will I take a financial hit? Only time will tell.
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