BNI Puts

Discussion in 'Options' started by TheGoonior, Nov 6, 2009.

  1. Thinking of going long Jan10-90 Puts.
    Target is somewhere in the recent gap (ideally the close of the gap, but we'll see how it responds).
    • Pro
    • Huge gap up, lots of open profit on the table
    • Didn't participate in yesterday's run up
    • Declining volume over last 3 days. Smart money was long before the takeover.
    • Cons
    • Buffet has endless dollars
    • Market on a tear
    Using my usual 2ATR stop.
    Any thoughts either way?
  2. dmo


    Missing from your analysis is your reason for believing the deal won't go through.
  3. I expect it to pass, if it doesn't, then it would probably really tank, but I'm taking a shot that there could be some near term weakness that pulls it back down a bit.
    This is not a long term trade by any means. I've given it a little bit wider stop at the beginning (position scaled accordingly to be within my risk rules), but if it closes over $98, then I'll consider myself in the wrong and exit. As they say: "You never know until you bet"
  4. Jesus


    Wow. People will trade anything. This deal is going to go through. So this stock is a 100 dollar stock. Arbitraguers won't let it go much under that, and your betting against it? Why??
    You are betting against a stock that is known by everybody to be valued at 100 dollars, while it is less than 100 dollars??
  5. Yep, this trade is going to go through and maybe it's worth $100. If that's the case and it can be manipulated and those who can manipulate it know it's value, why would they buy it for $100 when they could drive it down and get it for a better bargain before running it back up? Just because it's a wonderful stock doesn't mean it's independent of the general market. It may be strong as hell in the longer term, but short term weakness will weigh on it like any other stock.
    This is a short term play with a bit more risk and a well defined exit point.
    Maybe it goes down and I make some nice money and maybe it goes up and I lose a little bit (my exit point is known and I'll stick to it).
    We shall see.
  6. ptrjon


    I know when you short securities, the securities are borrowed at random from holders...

    but is there any way I can short TheGoonior's brokerage account?
  7. plan


    Hey stop bashing him, we need guys like him in the stock market.
  8. Oh well, BNI simply does not want to breakdown. Exited with a small loss.
  9. Jesus


    LOL. Very funny.
  10. Jesus


    LOL. "Doesn't want to breakdown." Wonder why? Maybe because THE RICHEST MAN IN THE WORLD IS PAYING 100 DOLLARS PER SHARE FOR IT. Keep shorting 100 dollar bills at 98 dollars.
    #10     Nov 14, 2009