chain reaction model

Discussion in 'Options' started by botpro, Jan 11, 2016.

  1. botpro

    botpro

    I wonder if one can build a chain reaction model with options.
    By this I mean if there are say 3 companies or ETF's, labeled A, B, C,
    then each invests a certain share (for example 5%) of its market value
    into options of the other company, ie. A invests into B, B invests into C, and C into A.
    Now, if C makes an excess profit beyond expectation and because of that its stock price rises 10%,
    will this not cause a chain reaction? B will win big, and additionally because of that,
    it's own share price will rise even more than 10%. And the same happens to A, ie. a chain reaction, or a gearing-effect.
    Can this be done in reality?
     
    Last edited: Jan 11, 2016