Buying SOFI puts: hedge math and breakevens

A long put is the right to sell 100 shares at $16.5 until August 28, 2026. Max loss is the $96 premium; max profit is $1,554, reached only if SOFI goes to zero.

Below $15.54 the position is in profit at expiry, gaining one-for-one with each dollar the stock falls. Above $16.5 it expires worthless — which is the good outcome if you own the shares.

Puts carry a structural headwind: skew. Downside strikes on SOFI trade at higher implied vol than equivalent upside strikes because everybody wants the same protection at the same time. You are buying the expensive wing, always.

As a hedge on 100 shares, this put caps the loss below $16.5 at the cost of 5.9% of position value — an annualized drag of 79.6% if you run it continuously. That is the honest price of permanent protection, and it is why most people don't.

The modal outcome for a bought put is expiring worthless. SOFI above $16.5 at August 28, 2026 costs the full $96, and stocks drift up more often than down.

Timing risk is worse than for calls: crashes are fast and rare, so a put's payoff is concentrated into a few days that may fall outside your 27-day window entirely.

The ceiling on a spread is a real cost, not a theoretical one. It is paid exactly in the scenarios where your thesis worked best, which is when it hurts most to notice.

A rate-sensitive fintech with a strike ladder in fifty-cent increments, which means the granularity of the target you can express is coarse relative to the moves: one rung is three percent of the stock. Directional structures here are blunter than they look on the payoff diagram.

SOFI's Aug 28 strikes are $0.5 apart near the money (3.07% of spot). Coarse enough that the strike you want frequently does not exist, and the nearest rung is a different trade. 49k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 20 strikes on that expiry — 48% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Adequate at the near strikes, thin beyond them; the bid-ask is a large fraction of the premium at every strike.

Skew is inverted: the 25-delta CALL implies 6.0% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Owning upside on an inverted skew means paying the expensive side of the surface, which is worth knowing before you buy the call. The term structure is in contango: the back month implies 2.2% more vol than the front. Calm now, uncertainty later — which rewards selling the front month and makes the back month an expensive thing to own outright.

At 50% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $2.22 over 27 days — roughly −13.6% to +13.6%, or $14.09 to $18.53. That band is the free part of the move. Anything your structure needs beyond it is the part you have to be right about.

The specific way people lose money on SOFI: Ignoring costs. A $0.02 slip on a $0.15 credit is thirteen percent of the trade, and no delta table shows you that.