Chungst

A Low-Risk Cracker Barrel [CBRL Group] Options Play

It is a scam because the returns are misleading and that's why I pointed it out.

The original post stated: "That's a $10,440 gain or 52.4% cash-on-cash if CBRL finishes above $30 on expiration day next January" without disclosing the use of leverage. This is not how one would calculate return under GIPS.

Mr. Price himself admitted to his own mistake in his earlier piece on Microstrategy when he wrote:

"You do need a 'margin type' account and paid-up marginable equity to do these trades. You do not need to lay out any cash other than your net purchase price less the option premimums received. "

"If you make $635 on the expired option in your example by writing a put against stock you are already holding it is, indeed, a return on a negative cost of capital.

If you want to calculate the return on your theoretical margin requirement of 20% of your net committment of $6315 then the return on that would be $655/$1263 or 51.86% for the eight months until expiration [assuming the shares stay above $70]."

source: seekingalpha.com/artic...

Clearly, Mr. Price is trying to fool people again. If he agreed to the use of margin to put on the options trades, then he agreed cash on cash returns was misleading. He can't have it both ways (personally, he is the one who is cluesless regarding his hypocrisy).