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What happens to puts if the Treasury becomes the biggest buyer in the market?
Investor summaryBullish
Hypothetical scenario where US Treasury buys stocks to prop up markets, implying puts are worthless and front-running gov is the new strategy.
Bull points
- Government intervention creates a guaranteed price floor, reducing downside risk for equities.
- Front-running state capital inflows offers a low-risk arbitrage opportunity for retail investors.
- Direct sovereign buying power overrides traditional fundamental valuation metrics.
Bear points
- The premise is highly speculative and currently lacks any legislative or policy basis.
- Such market distortion would likely lead to severe long-term inflationary pressures and asset bubbles.
- Reliance on political whims introduces unpredictable regulatory and systemic risks.
Post body
Imagine this: the U.S. government starts buying stocks, not to save banks, not to save the economy, but just to keep line go up. So, at that point, are we investing or just front-running the government's cost basis?
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