XpresSpa Group Inc (XSPA)

[xlt leader]

The simple answer is that the TUTs would rather not lose money. In your roulette example $1000 on red alone is a total loss if it comes to black. I am not that familiar with roulette so I may get this wrong, however if the $600 bet on black comes up they win some multiple of that which offsets the 1000 bet on white, now they don't win as much as if they bet on black alone and are right but if they are wrong they lose it all. In the stock market of course it does not work this way. You can sell you positions quickly or slowly. They (group one trading) did buy over 332,000 shares outright, and if my analysis is correct they hedged by purchasing puts at some strike and month which I am not aware of. This protects them on the downside. Simultaneously they sold calls which creates a collar. They would receive money or credit for the calls, again at an unknown strike and month. This would lower their average cost which I believe is $2.87. So with an average around let's say $2.60 if the stock pops hard, they will sell their puts immediately and they will give up some of their stock at a certain price which is unknown. They will not lose money in this scenario. They will not make as much as if they went all in on the stock but they will not lose which I think for them is more important.

They would rather make less if they are right than lose a lot if they are wrong. Many companies use options as hedges. You would be surprised to know that the biggest option "player" in the world is Warren Buffet.