The Secret to selling a $1,000 Car for $5,000.
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Conman - Biography of the Yellow Kid |
Here is how scheme works, I have taken the liberty to make the scheme modern, substituting options for horse races and houses for horse rigs.
Step one: Locate any banker at medium sized bank, who believes in tips.
Step two: Ask to borrow 5X against the collateral in your house because you know, for example, that a certain company has primed its options to key employees and is about to release good news - which will raise the stock's price. Intimate that you got this information from a disgruntled HR employee. Call the date that the good news is going to be released "Date Y".
Step three: To obtain the bank manager's approval, promise to repay the 5X out of the winnings, and also give him the collateral in house as a bonus for assisting the scheme. It is a cannot lose proposition. Nobody is going to borrow 5X to make a losing bet, are they? Well are they?
Step four: Prior to Y, bleed the bank manager for more money: to pay off the HR employee, the broker, and a few other prosaic villains who must be enabling the scheme.
Step five: Post Y, sadly announce to the banker that something must have gone wrong, that you are cleaned out because the stock failed to move. Turn over the collateral.
How does anyone make money on this losing bet? Aren't I down 6X?
No. I am up 4X. I am going to "make" the losing bet, in that the options that I have "bought" will turn out to expire worthless. Strangely, however, I didn't actually buy the options - I simply have a receipt for the losing bet. And ever so sadly, I must turn over my collateral to you. Something for nothing. But not the way the banker thought that it would turn out.
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