Put-call parity is completely out of whack on DJT. You can make around $8 a share shorting and covering with P-C at $60 for 19-Apr ... if you can short.

Can anyone short?

I think that $8 tells you something about the cost to borrow the shares.

Yeah - I just took a quick look at Bloomberg OMON, and the annualized borrow cost rate goes as high as 318% per year for the April 26 maturity date. It comes down after that, but the implied forward price for a maturity around Election Day is just about exactly half of the current spot price.

I looked at using low strike calls in place of the stock but the spreads are stupid.

:-/

I looked on a brokerage platform yesterday. Shares were available to short at 515% per year.

It’s all about emotions, right? The only people to hold DJT are presumably fervent believers in orange Jesus, and so you’d have to pay them a shitload of money to pry that pretty stock certificate out of their hands, even for a short period of time. But it was nice to see Professor IPO himself (my old friend Jay Ritter) quoted in USA Today as saying the stock is heading for $2. At least as a waypoint on the march to zero.

Well, emotions aside, there's kind of an interesting financial engineering problem here. 

Trump needs to raise cash and, as a hypothetical, let's say he seeks a deal where he lends his shares as collateral and receives 10 cents on the dollar at current market prices. You're an investment bank or other potential counterparty. Can you do the loan fairly risklessly -- over say 9 months? You will earn the fluctuating borrow rate on all his shares, plus whatever rate you charge Trump (with great credit risk) and can also hedge in the options (plus shares) market. Is it do-able?   

My understanding is that he is prohibited (for six months?) both from selling his shares and from using them as collateral for anything, presumably including loaning them to be shorted. But (a) I don't know if that's true; (b) I don't know if he'd be able to find some brokerage firm that would ignore the limitation somehow; and (c) the DJT board might vote to end the restriction ... although I would hope that if they did, they would be required to send up warning flares with the SEC.

I view it as a sort of cryptocurrency: no underlying value, but the hype can have it go up to even stupider levels than where it's at now. I've looked at deeply out of the money bear call spreads, but the premiums available just didn't outweigh my "people could get even stupider" concerns.

There has been a lot of volatility to the stock price, and I think I could probably get away with buying the long call end of the bear spread on a dip and selling the short end on a recovery ... but I don't want even for a moment to bet on a stock trading at $60 going up in price when its realistic value is around $3 a share; a Wile E. Coyote moment might be excusable if you were missing some critical information, but if you willingly and knowingly go into it and get caught, that's a badge of dishonor that I don't think I'd ever be able to shake off, at least in my own mind.

I'll look Monday morning at the bear call spread I've been eyeing; maybe the Trump fans will have talked themselves into even greater fanaticism and the premiums will be more inviting.

And I'll look at the put-call parity arbitrage with a low strike price call in place of the stock, but I'm certain there are far bigger fish than me making the markets, and making sure the spreads are wide enough that there's no easy money to be made in any imaginable way.

My few cents to Marsden's points above. Trump might get an exception from the board to sell his stake. The board are his kids and pals, Trump needs at least 175 million in cash. It's likely that the board will approve the exception. This company has no clear path to profitability, considering current landscape of similar businesses, it's hard to make a case that its fundamentals will improve. Clearly shorting the shares directly even if you can locate them at insane borrowing rates is a bad idea. Shorting naked calls with proper strikes and expiry dates is something to consider.  

GME and AMC meme stocks is a good baseline (imho) to consider to estimate the decay of price pop to "fair" value, Algthough the analogy is far from perfect, considering political factors 

I think DJT doesn't really have a lot of clear parallels; it's driven by a sort of religious fervor rather than garden variety contrariness. I think the bitcoin, "this is the new technology that changes everything" faith is a nearer parallel than GME or AMC.

All right, I've dipped my toe in.

19-Apr expiration: write $30 call, buy $30 put, write $45 put, buy $45 call.

So this is basically two bites at put-call parity, one (C - P) at $45 and the other (P - C) at $30. Theoretical price, ($30 - $45) e^(-rt), or -$15, with some interest adjustment.

Executed price, -$17.60 (* 100) with $3.21 commission.

Underlying pays no dividends, so that's clean, but the options are all American rather than European, so that's where I could get bitten in the ass. I think my absolute, crazy worst outcome is maximum loss on both the put and the call spreads, so having to come up with $15 each way, or $30 total, so a net loss of $12.40.

But far more likely that I end up having to shell out the $15 theoretical value and pocket $2.60 with essentially no risk.

Obviously, I had to open my position before consulting you sharks about what I overlooked, but now that I'm in, what did l overlook?

lol

I think the risk-reward looks pretty good. 

But, if we're talking absolute crazy bad luck, a scenario could be: Fri Apr 19, the stock is trading at the close around $30, 
with the $45 put quoted bid 14, ask 16. 

You are loath to buy back that put at $1 over parity so you decide to get 100 shares put to you at $45 on Sat.
You can't sell DJT Fri because that would be a short sale and there are no shares to borrow. DJT opens Monday at $X. 
If X~30, you're good. If X~15, that's your previous 'absolute crazy'.
And if X<15, things are even worse than that.

Of course, you might decide to bite the bullet and buy back that put on Friday at $16 + comm
 

Thanks for your thoughts, Alan.

There is a story of someone on Robinhood getting wiped out in a manner similar to what you describe, but he did two things that I avoid. First, he used options expiring two years in the future, and second, apparently his underlying was some sort of kinky VIX ETF, stock symbol “UVXY.” So he just about maximized the time for the American-style aspect of the options to screw him, and he was dealing with an underlying that people were probably using as a pressure-release valve for other kinky things they were doing … which probably was why he was able to get a negative effective interest rate on his position.

Other than your scenario, I think my risk is having one spread exercised early against me for a $15 cost, and then a complete reversal of underlying price and the other spread costing me another $15.

For essentially 17% return in under three weeks, all of those remotely possible loss scenarios are very acceptable to me.

Well, partial answer: my short $30 call was exercised at 02:45 this morning. Now I am short DJT with borrow rate of 789.83%, or around $105 a day; this is why I like to do new investment trickeries in small scale to begin with!

So I'll close that position along with my $45 call, I think. Will find out if I get dinged for one day's borrow cost.

My thinking is generally that with a reasonably priced, non-dividend paying stock, it doesn't make sense to exercise a call early: call price plus strike should be more than stock price ... which was the case here at close of trading yesterday. But for DJT, nothing after "reasonably priced" necessarily applies.

I'm guessing that someone who was short DJT decided that they were getting close to a bounce level, and started worrying in the middle of the night about choking on borrow costs. So they exercise.

I don't want to rely too much on that explanation; there is a net positive number of DJT shares existing, after all. But it's a starting place.

So rather than the normal case of having a choice between interest-earning cash and a non-dividend paying stock, in this case it's a choice between earning 5% on cash or earning 789.83% from buying the stock. With markets open, it would still generally make sense to buy the stock and sell your call at market prices rather than exercising, but apparently someone didn't want to wait.

Anyway, now I have a short covered call position that I'll close, and with it the bear call spread portion of my position. Just going by the break-down of prices for originally opening the position, the $30 call netted me $2,054.18 and the $45 call cost me $840.80, so up $1,213.38 total. And I got $3,000 for the exercise, so I'm up $4,213.38 and down 100 shares of DJT. If I can close out my short covered call position for less than $4,213.38, I'm ahead on the bear call spread, pending whatever I get hit with for borrow costs. I'm still on the hook for up to $1,500 on the bull put spread, which netted me $543.40.