Weinstein Trading and Fading

I wanted to short MCP and REE but once again IB didn’t have shares.

I was able to short via shorting call options which was not ideal but worked out well.
REE was a Brenton gap up and I traded it back and forth a bit before finally closing it out. I didn’t get full target but the target was pretty far from the entry price. I was able to get a large gain based on the price of the REE calls.
REE Jan 14 C + 1134

Still long COCO and short ICOP

+ 1134

 

Thanks Nodoji,

I have yet to trade my first penny stock (after more than 25 years of trading) but I don't think I will be able to say the same by this time next year. I don't think I will be going long without really believing in the company.

I have spent and am spending a lot of time looking at the price action of stocks that get "paid promotion" like RMGX and looking to short via swing trade.

So far I have stuck with listed stocks and done well.

Happy new year to you and yours Nodoji !!

RW

 

Thanks one2!!

I hope you have a great new years


RW

 

Hi Robert,

I have always lurked (for want of a better word) around here reading your journal but never posted here on ET. I understand you went through a tough time earlier in the year and I remember you writing about how you were going to study full-time or were not going to trade as much.

Its really nice to see you have turned it around... Congratulations!

Now that your profitable again, what sort of things have you put in place or what have you changed to ensure you don't get yourself in a tough situation again? Just curious... even though we don't trade the same style. You can PM me if you prefer.

Again, congrats on turning it around and wish you the best success in the new year... I will be reading about it here I'm sure

 

COCO Just the facts ma'am

I actually started writing about COCO (5.18 ↑9.28%) over a month ago and planed on finishing my work with COCO within a few days.

Days turned into weeks and here I am today watching COCO move up about 10% without my write up about the company completed. So in order to get this done and out there and me on the record I am going to shorten up the commentary and just give the facts on why I believe COCO is a must own, the most important long, and if you only had one stock to pick going into the new year why COCO is it. In fact COCO is the only stock I currently am long with. I own the stock, and I am also short puts but in the money and out of the money. I have been long for well over two months and if we are to start including my trading COCO (to the long side) over three months.

Based on my reading of the latest 10-Q filed with the SEC (quarterly earnings and financial reports) as well as numbers listed on Yahoo Finance, COCO is a stock that has a PE of about 3 and a forward PE of less than 15 (which I believe is incorrect and too high because I believe profits will be higher than many are expecting).
COCO has what I can only accurately call a massive short interest (somewhere north of 30% based on the NASDAQ website for a settlement date of 12/15/10). In fact it is one of the highest shorted stocks based on market capitalization, volume, and percentage of the float. Without anything else COCO could see large moves resulting from a short squeeze. Add in that mix a surprise in earnings which is very possible and we could see a fuse to a very large rocket going off sending the price of the stock into a spike higher. For me a surprise in earnings would not be a surprise at all and with the stock priced for failure just about anything other than failure in my opinion will get the shorts running for cover. As someone who shorts over 95% of my trades I know all to well what a short squeeze feels like and this in my opinion has the makings for a grand one.
Next reason and this is the biggie…. Legislative change happened that I believe has not yet been priced into the stock. We already know from words by Senator McCain and others that many of the Education department gainful employment criteria as well as default rate, and amounts in percentage of revenue that schools may get from the government are going to be addressed again and likely in my opinion to be watered down at a minimum. The for profit schools (which I guess makes the states schools “for loss”) have lined up many hired guns in Washington to battle and twist arms to keep the money flowing into the for profit schools top and bottom lines. I feel that one should never underestimate the willingness of Washington to spend taxpayers money. This situation is one that both parties will love to fund. Much of the money goes to fund minorities to go to college which the left loves and the free enterprise nature of the schools is something that the right loves to fund. This to me appears to be something that is not about to run into trouble anytime soon regardless of what some in the Education department had in mind when they tried to knee-cap the for profit schools. Betting against continued funding by the Federal government as the shorts have with COCO is akin to betting against the nature of how Washington works and that’s a bet I think many COCO shorts will wish they never made. As the new congress starts its new business in the next few weeks I expect there will be much less bad news and much more good news for the for profits. Headline risk thus is much lower now than a year ago in my opinion.
COCO is one of the smaller schools compared to the bigger names Like APOL (39.70 ↑0.53%) DV (48.05 ↑0.10%) and EDMC. With its healthy balance sheet, positive cash flow and future prospects receiving a buyout from another school or another that would like to add COCO to the portfolio seems to have a better than average chance of happening. While buyout rumors have come and gone in the past few months it seems to always move the stock and a buyout can not be reasonably dismissed without something changing the future prospects of COCO. While the PE and balance sheet look great if you remove “goodwill” and other non assets in a fire liquidation you still have a lot of assets to back up the price of the stock. It would appear that COCO agrees with this as well as they have been buying up their own stock and have authorized a lot more shares to be potentially repurchased then they have already taken off the market. COCO is big enough to get attention and small enough to be bought out.
I view COCO as the most important stock to own going into 2011 and the most likely to at least double in price within the next 12 months. While COCO doesn’t currently pay a dividend ways to gain exposure to COCO and get paid for the time include selling in the money puts and / or buying the stock and selling calls (covered calls). Another way I have looked into COCO was to buy Jan 2012 7.50 calls and to sell Jan 2012 12.50 calls for a cost of about 40 cents and a possible gain of about $4.60 if COCO moves above $7.50 before the third week Friday Jan of 2012. What is nice about using options is a stock can be leveraged for the upside and still limit the downside. In this case only about 40 cents is risked per share controlled and the time period is a whole year to get there. Of course if the stock is the same price as it is today all the investment would be lost so COCO does have to move up to break even or make money. I am using stock and options to take advantage of what I believe is a mis-pricing by the market. I am also looking to add during pull backs in price. I have written about LVS (44.38 ↓-1.00%) and GE (18.19 ↓-0.44%) and been along for the ride with both while they were kicked around only to rebound and take off again. I believe COCO will move up from the abyss much like they did and have people wondering why they didn’t buy when it was bargain priced.

 

Pretty slow day with the first and only signal coming in the afternoon with SCOK

IB didn’t have shares to short (technically they had 100….wuppie!!) and once again I had to look at options to get the job done. I was able to sell some calls at the 12.50 and 15 stike prices and even with the screwing I received from the market makers I turned in a pretty decent gain with it. Not as good as with the stock if I had been able to short directly but at least I didn’t end the day empty handed.
COCO (5.21 ↑0.58%) had an interesting ride today and I didn’t do anything with it other than watch the price action. I came close to selling more puts when it was near $5 but decided to wait until next week to see if it pulls back under $5 or not. I am increasingly getting worried that the low has been put in and the bus is about to leave. At the same time I know that its better to have a stock move your way and be correct with smaller size than would be ideal than to have a position that is a little to big and have it give you some heat. So I guess its all good.

SCOK (via long as a method of covering the short calls) + 17
SCOK Jan 12.5 C + 226
SCOK Jan 15 C + 34

+ 278

Happy New Year to everyone and I would like to thank you for reading my journal this year and watching my journey through the caverns of Wall St.

RW

 

In which time period of the day you traded SCOK? At noon or at close?

 

I don't actually recall the trade very well (still getting over the flu) but I pulled up the chart and it appears I would have shorted just after 1:30 est

 

MCP dominated my trading today.

I was not able to get shares to short with IB so I shorted call options instead. I closed out a fair gain and tried to fade it further when it moved higher. Ended up taking some stoplosses and also started trading the stock side by side due to liquidity/spread issues with the options. When in the afternoon MCP started to fall I held out for some real gains instead of just breaking even and it moved against me again. I ended the day still short some Jan 55 calls and flatened out of the stock right at the close. I have bids at lower prices for MCP and if it falls in afterhours I should get hit. With one dollar moves in any given 10 minute time span trading it back and forth was not all that bad while at the same time providing some risk management. I will be looking to cover starting in premarket tomorrow via stock and then the options.
STEC was a William (B9) signal. I traded it heavy and scalped much of the gain. I had some bids near 19 that would just miss before it moved up again and then I shorted and repeated this game for much of the day. It was not until near the close that it finally broke down but I had covered much of the short by then. My gain however was larger than normal due to the amount of shares I put on the short.
MCP + 143
MCP Jan55c – 46
STEC + 769

+ 866

 

MCP gapped higher today and the only good thing about it is it opened at the high and was unable to trade above it.

I traded MCP for much of the day and I ended the day with a small gain in the stock and a small loss in the options. I remain short MCP calls and long only 100 shares which I may liquidate in afterhours as I think MCP retraces tomorrow. I had a few close ones with offers just a few cents above the high of two symbols but nothing was lifted.
Still long COCO and looking to add to it in my main trading account but I am also currently looking at moving to a new broker so I am holding out to see what happens there.

MCP + 226
MCP Jan55c – 624

- 398