DRYS - This company has been hit by a number of issues recently which are all connected to the company's liquidity. We all know that this is bad news (e.g. LEH, BSC) - these were the ticker symbols for Lehman and Bear (just in case you already forgot them). However, as I have lighted on previous posts; this game is more common sense than anything else for folks like me that "eat", "breath" and "sleep" options trading. It is obvious that a company in financial distress will look for ways to get out of trouble (e.g. DRYS - see latest news on YHOO Finance) and this creates trading opportunities as shown below:
Filled Buy to Open 40 +OOCCU Limit 1.00 10:36:58 02/02/09
Filled Sell to Close 2 +OOCCU Limit 1.10 12:48:54 02/02/09
Filled Sell to Close 38 +OOCCU Limit 1.40 09:43:09 02/03/09
What the above sequence of trades show is that I purchased 40 calls of MAR 09 7.50 on 02-02-09 and tried to get out of the entire position / trade the same day (yesterday, 02-02-09) as DRYS technical signals indicated that the stock was not going to recover to allow for a nice quick trade; however, I was only able to sell two of the calls at 1.10 per contract. I did not panic and held the remaining 38 calls overnight based on my above theory - basically, I needed the company to come out with news stating that they were making an attempt to address their financial issues or just a upward movement based on short covering. As anticipated, the company came out with news which moved the stock up and I quickly sold (not greedy) the remaining 38 calls at 1.40 per contract.
Beautiful trade! Enjoy trading and continue to have fun!
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