Profiting Big from Woodstock '99's Downfall

Now, imagine another savvy concertgoer who had an even more pessimistic view of Woodstock '99's prospects. Unlike the first, this individual wasn't just looking to limit potential losses; he is aiming to profit from his belief in the anticipated decline in ticket values.    

Having researched the logistical plans and sensing potential chaos, he approached several ticket holders (holders of $300 tickets) with an offer: the pessimist would pay each of them $30 now for the option to buy their tickets for a mere $100 anytime before the festival. Many ticket holders, confident in the festival's success, happily took the $30, believing they'd never have to sell at such a low price.

As the festival's reputation unraveled, this sharp-eyed pessimist exercised his options, snapping up tickets for just $100 each. He then resold them to last-minute goers and nostalgic fans at a spot price around $200 — a price far below the original but still profitable for the pessimistic opportunist.  By effectively "shorting" Woodstock '99 tickets through a maneuver which resembles a put option, he turned a significant profit from the event's misfortunes. 

Like we noted before, in a declining market, many people lose.  Some lose more than others.  But some will also win.