Nowhere in his description (of Ackman's projectile-diarrhea R/R synth short) does it mention that he has risk to the puts, other than stating that he's short puts. The graph is a joke. He also states that Nomura needed to buy stock, well no shit, they're sitting on short synthetic shares. No way that Nomura lost a dime.
Yeah, sure, he's just plotting the usual PNL at expiry graph... At any rate, this stuff, frankly, boggles the mind.
Anyway, Matt Levine's graph is jank. No x,y detail. It could be cumulative and Ackman's net for all eternity. Who knows? My point is that THE RISK is in the short puts, and they're never mentioned, other than in the accounting of the initial debit.
I think it was understood as a proxy for long stock. Levine is a competent journalist. Nomura must have killed it. prob made the edg desks year.
I disagree (Levine). The puts aren't mentioned in terms of risk. He refers only to the upside calls. Makes zero sense.
Levine aside, one other curious bit, which may or may not be interesting, is Pershing selling a chunk of Mondelez ($834mm proceeds). Now call me a cynic, but I have a sneaky suspicion that it's not all in preparation for possible upcoming redemptions.
We don't wear short shorts... he's leveraged to gamma. It's analogous to stating that he's not leveraged when shorting a six dollar put in SPX.