COVERED CALLS. A Chicago Cub season ticket holder can hedge against the usual September disappointment by selling an option on his or her tickets.
Think of the service this way: You are buying dibs on tickets, getting in line to buy them at current rates, which experience has shown will rise dramatically should the Cubs still be playing in October. The risk? If the Cubs don't make the playoffs, you'll lose whatever you paid get in the front of that line. In [one fan's] case, that's about $350.
That's called "the option expires out of the money" and yes, dear beer-swilling widebodies, that does happen. The company that is making these options appears to understand something about derivative securities. Read the language. "Sale of forward rights (DIBZ)." Beautiful.
Daniel Lotzof, president of FirstDibz, said that the company tries to keep professional brokers at bay by "setting limits on what one can purchase in a specific market. There are also restrictions on how many a household can buy, or how much can be put on a credit card."
There are strict delivery requirements.

Should the seller fail to deliver, FirstDibz will make good with similar tickets for the buyer while charging "market value"—likely the huge markups the buyer is avoiding by buying early—to the seller's credit card.

Buyers also can sell their tickets auction-style. As of Friday, rights to Cubs tickets were available for the National League Division Series from as low as $147 above face value in the upper-deck 500 section to as high as $495 down the left-field line in Section 102. For Game 3 of the World Series, the first home game for the National League champion, rights to buy ticket in Section 102 were being offered for $715.

So why would sellers let go of tickets now that could be worth hundreds or thousands more in October? Sellers might be out of town for at least part of the playoffs or might not be able to go to every game.

And if there is no game, the seller of the option has transferred that risk to somebody else. A season ticket is a call option on playoff tickets that may or may not materialize. It has value, but without a market to determine that value, the value is hypothetical. The option market determines that value, as one Tribune letter-writer notes.

There are probably other derivative securities one could invent for sports tickets. A time-series of the option price could prove instructive. Was it only Saturday that the Cubs were at risk of falling out of first place? How quickly things change.

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