Forgot to post this about GGC
Here was something I was going to post on August 5, 2009 about GGC, but somehow I never got around to it:
There are a bunch of penny stock traders and retail day-traders buying GGC who don't know annnnyyything about the company.This was during a huge momentum/short-squeeze rally that Barron's even mentioned. Hope they are enjoying those shares. Still time to sell!
"That’s right, my little $20 buy point was a great call all the way up tot $30, but I had NO idea of what GGC was capable….all the way up to $47 is just awesome."
Right now GGC has only $50 million in free floating shares.
But I'm not upset about it - I'm going to sell the daytraders as many shares as they want.
And the bottom is going to fall out.
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11 comments:
The puts aren't all that favorably priced. Are they?
no man, you are paying like a four dollar premium on a deep in the money put option.
for simplicity...
stock is 28 and change
put is 2.5=62 to buy the put you need to put up 1.5 of 2.5 therefore your break even is 25.
that is a three $ premium- the implied volatility must be massive.
in fact i am thinking if you short the shares you could write the puts as this is an arbitrage spread. problem with that is you limit your overall return...
Can't short GGC at Etrade.
A friendly review of OptionsHouse, a flat fee broker I mentioned before.
Yes, anything remotely hard to borrow you are not going to find at etrade.
I have accounts at Schwab as well, and they are usually a bit better. But oftentimes if I cannot short the shares at Etrade I can also not short them at Schwab.
At least at Etrade I can trade (stocks) for $5 -- because I'm a former Brown&Co customer. Other than that I see no reason to have an account at Etrade rather than at Schwab.
I look at the Jan puts and I honestly don't see an interesting trade there: the 5s are at 4.30 ask, and the 2.5s at 1.75. The Nov puts are not much better.
I mean, clearly one would expect the common to crash once all those new shares hit the market. But how can one play that? It would have to practically go to zero.
First, you don't buy put options by paying the ask. You place a nice bid and wait for a day when the market is exuberant, the stock goes up, and you get filled.
I doubt an order for a price I'd be willing to pay -- one that offered a profit potential to justify the risk (given the market's current behavior, i.e. it continues to rise) -- would ever be filled.
It's an iron clad lock that the stock will drop 50%. Volume 32,000 today - wait until someone goes to sell a million shares!
I believe you.
The question is, how to profit from that?
I was also convinced that DSL would collapse, but could never really play it for a big gain. Shares just could not be shorted, and while I did make some money trading options, it was nothing like I wanted.
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