Taking a Gamble on the Election
As the 2024 presidential election approaches, I’ve found myself consumed by the so-called “Trump trade.” I’ve written about it, discussed it with others, and analyzed every detail. But I decided to take it a step further – I made a financial investment in the outcome of the election.
A Risky Bet
I purchased an option contract on shares of Trump Media and Technology Group (DJT), the company behind the Truth Social app. My investment will either result in a profit or a complete loss, depending on the election’s outcome. I’m not a seasoned trader, but I wanted to explore the world of options and learn more about market dynamics.
Guided by an Expert
Eric Hale, founder and CEO of Trader Oasis, helped me navigate the process. He emphasized that option betting carries significant risks and that his guidance didn’t constitute financial advice. I understood the risks, but I was determined to proceed.
Reading the Tea Leaves
I take the polls at face value, with Trump and Democratic nominee Kamala Harris virtually tied. I have no inside information, and I genuinely believe the outcome is uncertain. However, I think betting markets may be overstating Trump’s odds, which could be a false signal.
The DJT Factor
DJT’s share price is closely tied to Trump’s election prospects. If he wins, the company’s value could surge. But if he loses, the company’s future is uncertain. I believe the stock is overvalued and likely to fall in price.
My Trade
I bought a put contract with a strike price of $25, expiring on November 15, 2024. If the share price remains above $25, I’ll lose my investment. But if it falls below $25, I’ll be “in the money.” My possible gain depends on the price at expiration, with a potential net profit of $610 if the price drops to $15, $1,110 if it falls to $10, and $2,110 if it reaches $0.
A History of Risky Bets
I’ve tried my hand at trendy bets before, with mixed results. In 2021, I invested in BlackBerry, hoping to ride the meme stock wave. Unfortunately, I lost $1,760. Around 2017, I bought shares of Fannie Mae, expecting the Trump administration to privatize it. Instead, the stock tanked, and I sold at a loss.
The Outcome
My bet on DJT falling below $25 could pay off if Trump wins and the stock price still tanks. But realistically, my success depends on Kamala Harris winning the election. If I’m wrong, Trump supporters can freely troll me. If I’m right, I’ll try to be gracious about it. Either way, stay tuned for an update on how my Trump trade turns out.
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