27 years ago today, Mark Cuban pulled off a top 10 trade in Wall Street history
Cuban co-founded Broadcast in 1995. It streamed audio over the internetYahoo bought it for $5.7B in stock while Broadcast was doing $22M in revenue at a $16M lossCuban got 14.6 million Yahoo shares worth $1.4 billion, but he was locked in. Legally couldn't sell a single shareSo he called Goldman Sachs and structured what's known as a "zero-cost collar":• Bought $85 puts (downside protection)• Sold $205 calls (capped his upside)• The premiums canceled out. It cost him $0What happened next:• Jan 2000: Yahoo hit $237. The hedge looked like a mistake• March 2000: Dot-com bubble burst• 2002: Yahoo fell to $13. Broadcast was shut downWithout the hedge, Cuban loses 86% of everythingInstead, he kept over $1,000,000,000"They called it one of the top 10 trades of all time on Wall Street" — @mcuban
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
Post your comment
No Comments