Financial Freedom Friday is for people serious about financial freedom. Every Friday I share what 28+ years of trading taught me. My mistakes. My systems. The lessons that got me out of Corp IT by 40. Learn from someone already doing it.
In 1999, Mark Cuban sold Broadcast.com to Yahoo for $5.7 billion. It was an all in stock. A fortune on paper.
But a fortune on paper isn't a fortune. It's a risky bet. So he hedged. He put on a collar: bought a put to insure his shares, sold a call to pay for it. Renting his shares out and getting an insurance policy to lock in his gains until he could unwind the stock.
Then the bubble popped. Yahoo went from over $100 to $8. Everyone who felt rich watched it vanish.
Cuban executed the most famous hedge ever!! Instead of me explaining it to you...
I know we're not billionaires... Here's the part I really want you to hear. Cuban is showing us the power of hedging on a massive scale. I already know this power because I use it all the time. My coaching students know it as well, because I teach them my strategy and I've saved them 10's of thousands of dollars.
You see, this isn't just a billionaire's game. It matters just as much to you and me.
We might not be on Shark Tank (yet). But every one of us can set up a collar. Or even a super collar... I've been stressing this in GoodKidsTrading discord for the last several weeks.
And it's paid off for me. The collars reduce my delta, and I get paid as the stock pulls back.
You don't have to be a billionaire to think like one. If you're sitting on gains, setup insurance policies! Getting paid to for insurance is only possible in the stock market.
I don't predict the top or time the crash. But you better believe I'm just fine setting up collars when markets get extended off moving averages. Buy low and sell high only works if you execute the trade!
Hedging with options is bread and butter inside the Inner Circle. Building systems to remove emotions makes trading a business, not a hobby!
Turning knowledge into wealth,
$Maxwell
P.S. The collar sounds fancy. It's just selling a covered call and using the credit to buy a long put. Simple strategy that is so powerful!
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Financial Freedom Friday is for people serious about financial freedom. Every Friday I share what 28+ years of trading taught me. My mistakes. My systems. The lessons that got me out of Corp IT by 40. Learn from someone already doing it.
