The Option Pass
I am continually amazed by the new financial instruments that seem to emerge all the time - hedges on hedges, derivatives on derivatives. Last year, I was intrigued by housing price futures. (Baby needs a new pair of playrooms?) And the other day, I read in The Boston Globe about a big game ticket futures company, TicketReserve.com, that lets you buy options to purchase future game tickets at a certain price.
The article profiled a Patriots fan who, in October, when the Pats were looking pretty good and he was feeling bullish, had paid $1,000 for the right to buy two Super Bowl tickets for $600 a piece if the Pats made it that far.
Even though this fan really wanted to go see the Pats in the Super Bowl, he put his options out for bid during the Pats-Colts game on Sunday. The game was back-and-forth, the trading hot and heavy, and someone took the options off of his hands for $4,000. Which turned out to be a tidy profit of $3,000 for the options trader, and a loss of $4,000 for the options tradee.
It must have been a weird feeling once he'd sold the options. As the game see-sawed back and forth, I suspect the guy's emotions did, too. Damn, I'm going to miss the Super Bowl, I should have hung on. Damn, the Pats have lost. But, hot damn, I'm ahead $3K. (I bet he headed home from the bar humming the refrain from The Gambler: You gotta know when to hold 'em, know when to fold 'em.)
And there was the options purchaser on the other end of this particular see-saw. Damn, the Pats lost, plus I'm out $4K. (I bet he headed home from the bar humming an entirely different tune.)
If you bought the options pre-season, you could get in cheap and find yourself sitting pretty at game time. Before the opening kick-off, the option prices for the four finalist teams were Pats $125, Colts $100, Bears $18, and Saints $25. So a Bears' fan who bought options at $18 - or even a Colts fan at $100 - is paying only a small relative premium on the ticket price. And the Saints and Pats fans who went long and hung on aren't crazily out of pocket, either.
I'm not much of a gambler, nor am I a crazed enough fan of any sport that I'd pay huge bucks to see a game in person that I could, in truth, watch more comfortably on TV, let alone take an option on it - so none of this holds much appeal to me. But it's interesting to see that there's a company trying to make a buck with this options play. And I hope for their sake that they sold enough options, and took enough of the vigorish, to cover all their positions. At last look, tickets in the end zone were going for $3500.
Meanwhile, there's always next year, and the action's already heating up on Super Bowl XLII. The last trade I saw for the Pats was $262 each for a pair of options to purchase $700 seats. (This was not that far off the Chargers and Colts action at $280 - although Da Bears were a bit higher: $330.)
Meanwhile, since it is already, almost baseball this year, I was curious to see what the take was on Red Sox for ALCS, or even World Series. Alas, TicketReserve may play NFL. They may play bowl games. They may play NBA and NHL. But, dammit, they don't play ball.
(A nod to my sister Trish for giving me a head's up on this story.)