OK, with the collective wisdom of the HP crowd, how'd we miss this one?
So Cendant, the big conglomeration (and accounting fraud graduate) on July 31 spun off their real estate holdings, including our favorite (Suzanne researched it!) Century 21, into a new company and stock "Realogy" (nice cute name eh? Someone probably made $2 million for that one), trading under symbol "H" (go figure).
Well, wouldn't have that made a nice short candidate? Can you think of another company who's gonna tank worse than Century 21? It'd be tough. They have four businesses - real estate (owned) firms (Century 21, Coldwell Banker, ERA), realtor franchises, relocation services, and title agencies.
Too good to be true (for a short!)
I was gonna do put options, but they're already a fortune, predicting this $25 stock is going to $10. I was gonna short it today but it's already fallen 17% in the past couple of days, another 5% down today.
Damn! I wish this had shown up on my radar sooner. Come on HP'ers - step up your game!
Just kidding, but damn!
Still might short it though, although I"ll wait a bit until we get through the Fed announcement tomorrow - it may pop if Ben holds, and may crash if ben raises. Man, I can't wait for the announcement!
August 07, 2006
HousingPanic readers - you've all let me down and missed shorting the Century 21 spinoff! Suzanne should have researched this!
Subscribe to:
Post Comments (Atom)
15 comments:
I thought we had already collectively decided that shorting stocks is always a risky venture given market manipulation that always seems to control the short term.
That's right, unless you have loads of play money and know exactly what you're doing, shorting individual stocks is usually a dumb move. Leave it to the pros:
BEARX
bearx is just treading water, barely moving even in a down market
buying put options on dogs though - bow wow wow
but check out the cost of january puts on H - market is factoring in a 50% price decline on it if I'm reading that right. Amazing
Suzanne did research it!
I shorted TOL and now it looks like I'm going to take a loss.
when the F did you short TOL to take a loss - yesterday? Then you're a fool (and a realtor likely)
Tol is down over 50% for the year btw. I'd long it before I shorted it
Avoid The Daily Whipsaw By Sitting In Cash
Friday August 4, 7:00 pm ET
Trang Ho
Sometimes the best thing an investor or trader can do is nothing.
It's hard enough to make money in a bear market. It's also tough not to lose it. Three out of every four stocks follow the broad market's direction. Thus when the market falls into a downtrend, it's important to cut your losses, pocket your profits and move toward cash.
Sitting in cash lets you free yourself from the daily market noise. You can use the time to reflect, go over past trading mistakes and sharpen your skills.
Despite what some so-called market gurus say, your probability of finding a gem that bucks the downtrend is very small. Rather than finding a needle in a haystack, it's better to just go for the haystack.
If you are chasing breakouts or getting in just to be active, you could be subjecting yourself to a lot of volatility. It could eventually whittle away your money and, even worse, your mental health and confidence.
If you wait patiently, you can be prepared to jump in when the next opportunity arrives. Your chance of finding winners grows dramatically in an uptrend
http://biz.yahoo.com/ibd/060804/corner.html
I bought the Nov 25 H puts the day that I learned about this stock from HP and bought more this morning. My position is up about 50% today.
I only have 10 of the H puts. My bigger positions are CORS puts (about 250, mostly Sept and Dec, up about 150%) and 200 WCI puts (mostly Sept and Dec, up about 150% on average.
My expectation is that the HB put will do well when WCI, CFC and TOL earnings come out on Wednesday.
I'm glad that I bought these positions when the IV was not so high, but I am still buying when HB stocks bounce. HOV looks like it was a good buy Friday morning. My Sept HOV 30 puts are up 50% since they were bought on Friday.
I think that we are now at a good point to buy Home builder puts. My housing bubble account was up 100K during the second week of July but has given back about 60K in the last couple of weeks. It's possible that these stocks will go up on the Fed pause, but my guess is that the pause is mostly priced in and that the market will go down, at least by next week.
Bill
bill, you have balls. best of luck.
if you had one and only one play to put on today, right now, where you could lose the whole thing and not worry, but if you put the play on it could go crazy, what would it be?
one play.
Keith:
I have not been taking any trades that might lose everything. My strategy for Home builders has been to buy at or in the money puts with 3-6 month strikes. I prefer puts that are a few dollars in the money. One of my best buys was in March--KBH at the money $65 puts which were sold with KBH at $48.
CORS is the bank that specializes in loaning to condo developers. I have been buying puts on it since it was $30 and now its $22. If the stock bounces or the IV goes down, I will buy more Dec and Mar 25 Cors puts.
About as risky as I trade was buying Sept 17.5 WCI puts on Friday when the whole market bounced. I also bought HOV Sept 30 puts with HOV at $30.5. It was down $2 after hours on terrible earnings and then when up $1 on the open. So, I assumed that the buying was just knee jerk and that the stock would come down.
In addition to CORUS (CORS), I have started buying puts on Banks that have higher than recommended (by FDIC) exposure to RE. My current positions are BBX (Florida), RF (Florida and Alabama) and NYB (NY City). I am buying in the money Dec puts and out of the money Jan 08 leaps. The bank stocks have low implied volitility = inexpensitve options), so the leaps are not expensive. I consider them a speculative bet on a recession in the coming months or year.
Based in part on this blogg and thehousingbubbleblog, I assume that housing will be worse in 3-6 months than Wall Street expects. Thus, I don't see my option positions as too risky. I think that there is good money to be made on the downside of the housing bubble until most investors agree that housing is terrible.
However, I am just learning to play the 2-4 week cycles by taking profits when there is a sharp drop in the stocks and rolling into further out positions.
Buying at or out of the money options when the stocks are moving fast is now a good idea. Concerning the Realology (H) options, the volatility was only 20% when I bought a couple of days ago, but it was 40% early this morning and probably higher as the stock moved down. So, it's best to keep an eye on stocks and options and to not buy when the IV is at a peak. I am using OptionsXpress as one of my options accounts and they have nice graphs of implied and historical volitility. I also use Schaeffer's score card (at SchaeffersResearch.com) to keep at eye on sediment. The HB stocks were rated 1-3 out of 10 when I started buying puts in March. That means amost no short interest, almost all strong buys by analysts, low P/C ratios and down trending stocks. I think that they are mostly 4-6 out of 10 now, so their technicals are not so bad.
I was buying alot of WCI options in late June/early July as the stock showed a bounce up. I only wish that I had sold more at the low in mid July. But I think that it makes sense to buy options as the stock bounces up and to take some profits when you can. When a positions hits 200% profits, I tend to sell half, just to avoid getting killed by being too greedy.
I try to keep an eye on short interest (not good if it's too high) as well as the near term Put/call ratio. WCI is the one home builder with rather high short interest. With it's concentrated building in Florida, it seems like a sure thing, if you buy Dec 15 or 17.5 puts. However, they are now fairly expensive.
I am professor who does some work with math models and I have studied options a good deal---no one should just jump in. Read a book or two, at least first.
Bill
beautiful post bill
I play with puts, $1000 to $2000 each, most for January. It's tough to follow hour by hour or day to day, so my take is bet against companies that'll be in trouble after christmas, and look up in January and see where I am
But I'd like to add to these positions - I think we've just fallen off of a cliff, and not a lot of people have seen the footage yet
Keith, what you're doing here could be construed as "securities fraud." The SEC will extradite your monkey ass in a heart beat and I hope they do.
securities fraud? I tell people what I buy and what's in my portfolio - which aint much these days outside of cash
and oh, yeah, HP is HUGE! I move markets every day
ha!
I think I put a comment in when the news hit. You were asleep pal.
The only thing I'd put my money on is a "Bill" having balls. Coconutz!
Wow, that's a big advertising balloon! Wouldn't it be fun to watch the big bubble burst?
Post a Comment