Nickels in 2011 and Real Estate in 2006

Someone asked me in the comments section whether I thought I would really buy nickels in size. I gave an analogue from late 2006 that shed some light on the dilemma.

At that time it was possible to get free options on real estate, chiefly condominiums, by signing purchase contracts (with "outs") for projects that were still multiple years away from completion.

The developers were willing to offer these free calls because the banks would (stupidly) condition their financing based upon the percentage of units under signed contracts.

Collecting free options is all well and good - you have positive expected value. The problem was, it seemed really unlikely that the real estate bubble would last much longer.

So, the probablity distribution (though skewed positive with positive EV) was dominated by a payoff of zero.

Sound familiar?