rolled march covered 5C to april 7.5C, used some premium to buy 1.5x position april 2.5P. I knew i should fucking closed the march 5C when it was at 0.05. Got lazy and decided to let it expire and not pay commission. oh well, at least made good money on the underlying.
Earnings Release: Tuesday, March 24, 2009, After Market Closes Conference Call and Webcast: Wednesday, March 25, 2009, at 9:00 a.m. EDT http://www.capitallink.com/ppress/ppressfile/23406845/dryspr032309.pdf Lots of buying today all day, shorts covering in to dilution or funds buying? Possible scenarios: 1. Numbers are not good, stock tanks AH and then in the conf. call. spin off announced no need for shelf reg. and stock rallies to higher ground. 2. Numbers are better than expected, stock rallies AH, no spin dates announced and shelf reg. is going ahead, stock tanks. 3.Numbers worse than expected no good news in conf call, tanks AH, then tanks some more. 4.Great numbers and good news, rallies and gaps and rallies some more, never looks back. I think scenario number 2 is the most likely. I have been adding the 7.5 April calls all day for a total of 500. Will be looking for a place to get short 10K DRYS above $5(hopefully well above) before the close tomorrow, might sell the $5 calls instead of shorting the stock or a bit of both trying to stay close to the 5:1 ratio. If anyone has a better strategy for playing this I am all ears.
Great strat. DRYS is down because the Baltic Dry Index went down 90% in a matter of months....unprecedented in history. Shipping is mombo weak. Another Idea: Credit spreads....sell 5, buy 7.5 as a stop. If tomorrow shows no falter in the indices, your timing will be about a week early. Tomorrow is definitely "the tell".
I am expecting scenario #2 but am hoping for #4 and that is where the real potential upside in this trade is. You are right, if #2 transpires then a pure credit spread would be the way to go but if we actually get some real good news I want the ratio skewed in favor of capturing that reward. Selling the stock/5 Calls is just a way to reduce the cost of the trade if the stock doesn't rally. I think what I will likely end up doing is selling around 100 5 calls before EOD, then if there is a pop AH on the #'s short up to 10K stock and wait for the conf call. If the stock continues I am still in a good 3:2 ratio and should be able to profit hansomely, if not I have some nice down side protection for any bad news in the conf. call that tanks the stock and might even get lucky and break even.
I sold 5 put last month, got assigned so sold 5 call - cost basis is down to 2.23. I will keep doing business at 5 since it sounds like a lucky number for Drys.
I'm worried about you guys. Isn't there better fish to fry for instance ? You're shorting a $5 stock that was once $100 ? I don't see any resistance till 10, then 18.