Making money is important but preserving it is more important!

In 1999, Cuban and his partner Todd Wagner sold Broadcast.com to Yahoo for $5.7 billion. Cuban received 14.6 million shares of Yahoo. With Yahoo shares trading at $95, he became a billionaire overnight.
Cuban wasn’t alone. The internet bubble made many ppl rich. But after the bubble popped in March 2000, most of them lost their fortunes. Cuban, on the other hand, actually got to keep his money. Because he had the foresight to execute a shrewd option trade to protect the wealth.
Cuban had a feeling that Yahoo stock was funny money. Yet, as part of his deal with Yahoo, he wasn’t permitted to sell his shares immediately.

So he entered a massive options trade to protect his $1.4 billion stake.
For every 100 shares of Yahoo stock, Cuban bought one put contract (strike $85) and sold one (strike $205). The term of each option was three years.

He bought a whopping 146,000 puts and sold 146,000 calls.
The cost of the puts exactly offset the premium of the calls.
So Cuban’s trade was practically free.

At first, it looked like the trade was a costly mistake.

Yahoo’s share price shot up to $237 by January 2000 – much higher than the sale price of his $205 call options.

Then the internet bubble burst.
And two years later, Yahoo shares had sunk to $13.

If Cuban hadn’t executed his options trade, he would have lost more than 85% of his wealth.

Instead, he managed to hold on to almost all of his money.

End of Thread.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Aditya Kondawar

Aditya Kondawar Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @adi2five

14 Oct
A lot of us watched #Scam1992 recently - So I thought, Let me take you down the history of BSE!

History, Images, Myths, Legendary stories, and a lot of nostalgia :')

Buckle up! :)

@BSEIndia @ashishchauhan @VijayKedia1 @Nithin0dha @palakzat @FinMedium @SumitResearch
Origins of the Bombay Stock Exchange

An Image showing Broker Pins

The Iconic BSE Building started out in this way in 1899!

Truly said - All great things have a small beginning :)

Read 17 tweets
17 Jul
TVS Group History

In the early 1930s, selling cars to rich zamindars in southern Tamil Nadu wasn't easy. They preferred horse-drawn carts. T.V. Sundaram Iyengar & Sons, or TVS & Sons, which had bagged a General Motors dealership, decided to drive its message home quite literally
A Chevrolet car, complete with chauffeur, would be sent to a zamindar's house, with a request that he use the car for a week. Over the next seven days, the family would often get used to the comfort and status the car gave them, and end up buying one.
TVS, established in Madurai in 1911, did not cater only to the rich. Indeed, its first business, started in 1912, was a rural transport service. TVS went the extra mile to ensure buses ran on time.
Read 6 tweets
2 Jul
So Reliance Retail is in the news as it is being touted to be in the race to acquire Future Group assets to become a bigger Indian Retailer (It is already a behemoth).

A small thread!

#RelianceRetail #Retail
According to Trak.in , "All the control from Future retail basket, including FBB, Big Bazaar, Food Hall and Central, along with Future Lifestyle Ltd, and Future Supply Chain Solutions will be handed over to Reliance. These three entities will be merged into one.
Speaking of Biyani, he will be leftover with control of Future Group’s FMCG business and some other smaller group companies."
Read 11 tweets
28 Apr
RELIANCE IND has a Board meeting on April 30th to discuss Q4FY20 Results, Dividend, and a Proposal of a rights issue

The last rights shares that RIL issued was in 1991 in ratio of 1:20

So here's a small thread on RIL, Dhirubhai Ambani, Mukesh Ambani, and a few amazing facts
#1 This is the first public raise the company is doing after 1991 or after 29 years. (No Splits in its history)

The company does have a history of Bonus shares. (attached)
Before jumping onto 2nd fact, we see that unlike other behemoths, Reliance Industries doesn't do concalls and management interviews. Now some ppl would argue that that's bad, but I think that's quite professional. They focus on business and not interviews!
Read 32 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!