Friday, June 20, 2008

Mid-June Trading Update

Isn't that beautiful? It's the "Spit" in Scituate, Massachusetts. You'll need to click on it to see its full splendor.

First, familiarize yourself with my last update.

Since then I have shorted General Motors Corp at $17.73 - and the other day I covered it at $14.88. $130 oil may just bankrupt the company. In fact, if you think oil will keep rising or at least won't drop much, shorting GM would be a solid way to place that bet.

I increased my HSBC Holdings short by adding a few July 80 puts at $1.30 apiece. See my old post HSBC - A Long Term Disinvestment.

I increased my NASDAQ-100 short at $50.31 - bringing my cost basis to $49.25. Then I covered 57% of my position at $47.15.

I covered my Bank of America Corp short at $29.55 - if you recall, I shorted this turd at $38. Ken Lewis will be fired within 12 months - I wish I could bet on that!

I bought some Jan 5 LEAPS in Coeur d'Alene Mines Corporation, the 2010s, for .60. I just can't resist this POS stock - no matter how much I keep losing. I see the stock as a very cheap call on higher silver prices. Heck, with these calls, I've got 1.5 years for the stock to rally.

I bought some June 25 puts in Wells Fargo for .35 apiece. Yesterday I bought stock against them "one-to-one" at $24.76. Then I dumped the stock at $25.27. So I own the puts for "free" (actually for a .16 credit less commissions) which unfortunately only lasts one day - because today is June expiration. So if WFC dips down to or below $25 I will again buy stock against my puts and then root for it to rally. If it drops below my purchase price, I will just unwind the riskless position by exercising my puts after the close.

This is a basic "gamma trading" option strategy - though I understand it reads very complicated to the unknowing.

(As I was typing this, at 8:17am I was able to buy stock at $24.99 against half my puts. Let's see if I can flip it. I am out there at $25.25)

Look at the charts above.

Obviously, as great as my Lehman Brothers and Washington Mutual shorts were....I covered them way too soon!

LEH - I shorted at $48, covered at $38, then it dropped to $21.17!

WM - I shorted at $12, covered at $9.48, then it dropped to recent low of $5.75!

Pretty much all my recent financial shorts have gone substantially lower than where I covered. Oh well.

If a trader wants to keep his sanity, he ought to eschew hindsight in all its forms. It's as dangerous as "hope" in prison.

Let me tell you something my friend. Hope is a dangerous thing. Hope can drive a man insane. (link)


Taylor Conant said...

Sounds like you're playing a hell of a game, trading-wise, lately! Congratulations to you.

I've been wanting to short GM myself but I don't have a margin account and I don't know how to get started with all of that. I don't fully understand puts, either. And what the eff is a LEAP?

Oh well, play on, C, and keep on shorting those "turds."

CaptiousNut said...

Well, taylor, I've given you some stuff to google!