Skiracer's stock slopes

[dmk112]

I got stopped out of NYX today. May look to re-enter tomorrow. Picked up some JNJ @ around 65.83 (calls) and NRPH @ 46.70.

Well BOT had a great day today, it appears it is being bought out by CME. Now, I have the 150 Dec Calls on this. Does anyone know what happens when a company gets bought out to the options? Do I just get cash for them? If I was at my pc this morning and the calls made a high of 12.50, but they closed at 9...not sure what to do here. The stock closed pretty poorly off its highs after the gap. Any ideas?

[skiracer]

DMK112 had a few changes to his port today. Here is the sheet with those changes. That is an interesting question he posed with the situation with BOT. I'm not sure I have an answer for him. Anyone else know about this type of thing?

[skiracer]

I'm watching the 15 min. intraday realtime charts and I see it stall with a couple of candles that are giving me those signals. I watched it spike up in the am and initially tried for a long in it just after 10 am but it didn't go and then I saw that it was spiking back up and topped out at 17.91. That's when I see the short play setting up and I like to wait until I get a clear feeling that it is going to go down. The worst that can happen is that I break even or lose maybe .15 or .20 tops. Were talking 220 tops with the commissions vs what I got today. I'm up 1.35 on the trade at the close today. That's a nice r/r. On 1000 shares I risk $220 to make $1350. Of course it always doesn't go the way you expect but it did this time. With those percentages working for me I could go 5 trades with losers and still break even. What makes it so good is that I'm sitting watching the stock fall on the raw data and time and sales screen and I see what is happening so it is a pretty educated guess in my opinion. But limiting the loss potential to $220 is the key.
It's just the way I see it an only my opinion, but the r/r numbers make sense vs the percentage of times it goes the way you expect it will. I love to find stocks that are in my opinion overextended or overbought. This is one of my favorite patterns and setups for a short play. Sooner or later they will exhibit those stalling signals and a large percentage of times they go just like this with ACOR. I really don't think of it as playing with fire since you are limiting the losses to a minor amount.
Another example is FMD right now. It has been going up with a vengenance and it setting up for a consolidation of those gains and a perfect setup for a short. I thought it would happen last Friday and then again on Monday or today. Still going up but I would bet my life that at some point soon it is going to have to stop and consolidate. Those watching and waiting for the inevitable will be the recipricents of that short play. There are alot of people in at much lower than todays close that are just waiting and watching and will protect those gains. That will produce the drop and the short play just like with ACOR today.

I made a mistake with my little dialogue on ACOR yesterday. I thought that I was up 1.35 when in actuallity I was only up .80 which changes the whole statement regarding the r/r on the trade. I risked 220 to make 800 which instead of being a 5 to 1 ration is really a little less than a 4 to 1 ratio on the r/r. Not a whole lot but definitely different that what I claimed and posted. Just wanted to clear that up and keep things straight in case anyone caught that and was wondering how I was figuring it. I figured it wrong initially.

[skiracer]

Some morning plays that I will be watching closely today are:
DFC: long above 10. I'm looking to short FMD and will take it short at the first sign of it stalling out today or whenever that begins to happen. I have a feeling it will be today. Keeping a close eye on it this this morning. SMSI long anywhere around 16.25/16.50 levels. I'll be keeping a close eye on the short play with ACOR this morning. It's up in the pre-market .30 this morning but that really doesn't mean anything. No physical stop in place but am watching it and will stop any loss of the .80 gain before it goes to far. I'm thinking 17.20 would be a good place to cover the play if it goes that way.

[Tatnic]

I got stopped out of NYX today. May look to re-enter tomorrow. Picked up some JNJ @ around 65.83 (calls) and NRPH @ 46.70.

Well BOT had a great day today, it appears it is being bought out by CME. Now, I have the 150 Dec Calls on this. Does anyone know what happens when a company gets bought out to the options? Do I just get cash for them? If I was at my pc this morning and the calls made a high of 12.50, but they closed at 9...not sure what to do here. The stock closed pretty poorly off its highs after the gap. Any ideas?

I sold mine as soon as I saw the news. The total deal is only $8 billion so the price is not going any higher (unless there's a new offer). If you hold those calls until after the deal you loose them all with nothing to show for it. Once the company ceases to exist, so do the calls.

[skiracer]

I sold mine as soon as I saw the news. The total deal is only $8 billion so the price is not going any higher (unless there's a new offer). If you hold those calls until after the deal you loose them all with nothing to show for it. Once the company ceases to exist, so do the calls.

Good explanation. I didn't know that the calls wouldn't be worth anything once the deal closes and the company ceases to exist. I was thinking that the calls might phase into the other company on a pro-rated basis. Thanks Tatnic.

[Rob]

If you hold those calls until after the deal you loose them all with nothing to show for it. Once the company ceases to exist, so do the calls.

I've heard differing claims on that question. Is there a good primary source for the true answer?

[billyjoe]

Ski,
Sold MOT @23.51. It could have been worse. MOT will come back but I can do better with the money in the 6 or 12 months it will take.

----------billyjoe

[Runner]

My AKAM trade is not doing very well. I do not like the volatility drop against me. Might take a 1R loss on this one.

[Runner]

Kicked out of AKAM for 1R loss...

[skiracer]

I'm still holding the short play on ACOR and took FMD short at 70. I don't want to get to confident with the FMD short but it looks like it is going to roll over.

[skiracer]

I'm still holding the ACOR and the FMD shorts going into the close. No other trades today.

[Runner]

My AKAM trade is not doing very well. I do not like the volatility drop against me. Might take a 1R loss on this one.

Here is the close on AKAM. Notice the huge volatile move against this position. Normally when this little indicator goes under the 10ma is a sign that this thing is in trouble. Anyway not to bad as the position was only 1/2 in size. But it is a loss and in this game get use to it. I can't control the market once I get in but the only thing I can control is where I get out. This is one of many that just did not work out. Contrary to what this forum is accustomed to here is a loss...hehe

[billyjoe]

Ski,
Bought ELN @15.52.

----------billyjoe

[Tatnic]

I've heard differing claims on that question. Is there a good primary source for the true answer?

I'm speaking from direct experience Rob. I owned calls on a company that got taken over and the value went to zero after the date of the merger. I complained to my broker and they accomodated me, but technically they could have told me to go pound sand if they wanted too. They had never experienced such an occurance and were at a loss. But they gave me a fair settlement and they're still my broker.

I've also owned puts on a company when it spun off its holdings. In that case, since the company still existed, I was given puts on it, and on its two spinoffs, whatever they were. That turned out to be a good trade (the company was CD) but I was worried at first that the same thing was going to happen. The difference was that CD still existed after the spinoffs.

Good luck trying to find out from any source what happens. It took me months to finally get it all sorted out.