June 20 news, with the recent popularity of oriental selection, New Oriental Education & Technology Group shares rose collectively, among them, New Oriental Education & Technology Group online is staged 5 times for 5 days, 10 times from the low point of the legend. And New Oriental Education & Technology Group share price from the low point is also continued to pull up, has also become a proper 10 times the share.

The shareholders quarreled, and Duan Yongping won the bet?

Recently, the media revealed that Duan Yongping bet correctly, New Oriental Education & Technology Group earned 10 times as much as he did, and shareholders quarreled under the official WeChat account of Sina Hong Kong. Some investors liked Duan Yongping, "Duan Jia won again this time", "Trust comes from understanding, heroes cherish heroes!" A gamble, because more understanding, when the winning rate becomes more than 51%, that is investment. "

However, some netizens said, "Duan Yongping can bet, and it doesn't matter if he loses the bet." It's a drop in the bucket. Does Xiao San dare to gamble? "

Of course, the focus of more investors is not whether Duan Yongping won, but Duan Yongping's operation of selling put. Why on earth did he sell put? did he really achieve a 10-fold increase as reported by the media?

Duan Yongping copied the bottom of New Oriental Education & Technology Group? What exactly is selling put?

On December 8, 2021, when New Oriental Education & Technology Group's share price plummeted, Duan Yongping said, "whatever I think, I don't think their company will be completely worthless, so sell another put. If put comes in, I'll take it."

According to the map, Duan Yongping sold put at a strike price of US $2, the number of tickets sold was 9999, and the royalty was US $0.20, that is, 10% of the exercise price, and the option date was December 31, 2021.

For selling put, Duan Yongping said, "I don't really know New Oriental Education & Technology Group that well." If you are really optimistic about a company, you should definitely buy it when the price is low, and you should not sell put. You will miss the opportunity. "

So what kind of product is selling put? Sell put, or put option, that is, the counterparty pays Duan Yongping a certain option fee, so that he has the right to sell the US stock New Oriental Education & Technology Group stock to Duan Yongping at the agreed price on the agreed date.

Generally speaking, on the maturity date, if New Oriental Education & Technology Group's shares are above $2 and sell the put non-exercise right, Duan Yongping receives royalties; on the maturity date, if New Oriental Education & Technology Group's share price falls below $2, Duan Yongping exercises the right to buy New Oriental Education & Technology Group, but needs to pay 9999 options for the corresponding stock; once he buys the stock, it becomes a long position, and as the stock rises, the income becomes unlimited.

In fact, according to the meaning of selling put, it is probably such a situation, Duan Yongping thinks that the current price is still high and wants to buy at a lower price, so selling put is used at this time, because selling put does not exercise power at that time, only when the expiration date is still within $2.

Did you win the bet? Did Duan Yongping earn 10 times as much as New Oriental Education & Technology Group?

According to the above introduction to selling put, it can be divided into three situations, depending on Duan Yongping's profit: 1) when the share price is above $2 on the maturity date, Duan Yongping does not have the right, and he gets a royalty of US $0.20, and 9999 is 0.2-100,9999 = US $200000, that is, Duan Yongping earns a net profit of US $200000, with a return of about 10%.

2) if the share price is between $1.80 and $2, less than $2, Duan Yongping still needs to buy New Oriental Education & Technology Group for $2, because he earns a royalty of $0.20 at this time.

3) if the stock price falls below $1.80, Duan Yongping must buy it with US $2. The entitlement fee is not enough to cover the loss. Duan Yongping is losing money at this time.

However, after the purchase, if New Oriental Education & Technology Group's share price rises, it is also a business that cannot be lost. Because New Oriental Education & Technology Group's share price is still above $2 (closing at $2.10) on the expiration date, December 31, 2021, Duan Yongping did not exercise the power, so he did not buy New Oriental Education & Technology Group, so there was no so-called 10-fold return.

So, how did Duan Yongping earn 10 times as much as New Oriental Education & Technology Group? According to media reports, when Duan Yongping sold put, the exercise price was $2, but now New Oriental Education & Technology Group's share price is about $22, so he earns 10 times.

Some investors said that New Oriental Education & Technology Group's 1ADR was split into 10 shares in April, and New Oriental Education & Technology Group's share price did not rise from the bottom, so did New Oriental Education & Technology Group's share price rise in the end?

This can be understood this way, because the split before 1 share = 1ADR, split 10 shares = 1ADR, then the exercise price of 2 US dollars, worth now equivalent to 1ADR=20 US dollars, now 1ADR = 10 shares = 220 US dollars, so increased 10 times, in fact, that is to say, I used to hold 1 share, equivalent to I now hold 10 shares, so if Duan Yongping bought, indeed earned 10 times.

For earning 10 times, Duan Yongping suspected in the snowball response, "Avenue only sold some put, most of the put will not expire until the end of the year, the loss is not known, but the current book is a little profit." It's just a little venture capital. "

Generally speaking, Duan Yongping made money by selling put, but because there is no exercise right, there is no return of 10 times, and the rate of return is the money earned by the option gold.