in: Swampfox; Swampfox > 2008-01-20;
| # Posted 2008-01-21 05:11:00 | |
| PG: | No, actually, I'm going to sell some G puts, and since I have some confidence in you, I'm selling the out-of-the-pounds August '08 134s and a few of the 132s as well.
I can't imagine you're going to get much of a premium for selling your way out-of-the-pounds puts, so it seems like a plan with little upside and more downside, especially as we move into the spring and the puts get closer to being in the pounds and the price heads up and you are screwed.... ... unless, of course, you have hedged, using some exotic combination of derivatives based on the G and the foreclosure rate on Inca Drive. In which case, I tip my hat to you, as the time to get a position on the G-Inca spread is now, before everyone knows about it. --------- The Springfield story was in the local papers a week before it got picked up nationally. For the time being, Springfield is letting the state AG do the heavy lifting on the legal front. I'm curious how it will turn out. Springfield wouldn't be the first public entity burned by investing in something they didn't understand, just to get a little more yield. Remember Orange County? |
| # Posted 2008-01-21 06:15:09 | |
| Swampfox: | I will leave the fancy shuffle plays and exotic spreads to others. I only sold the puts because the prices were so out of line that even a blind Argentinian ostrich could have picked them out.
The bulls were way too quick to accept your recent reports on knee gimpyness at face value. They think you're wussifying and are way over the hill. I know better than to bet against the PG however. Others may not see that the flame of competiveness yet burns brightly (well, how could they, given the normally winter thickened layers of blubber?) but I know better. Plus, I could see for myself how well and easily you were running as recently as late November. It's a little bit of a gamble for sure, but I'm betting on you. --------- I do remember Orange County. I wouldn't necessarily expect the average public official to be all that sophisticated as relates to the fancier types of financial products out there. Hardly anyone can understand the more complicated stuff. If you think you understand it, then you probably don't. And that was a while ago. Orange County stands out chiefly for its size, but what happened there must happen all the time across the country, on a smaller scale. But how about the ongoing fiasco at Sallie Mae, with their equity forward contracts? They certainly should have known better and what they did was indefensible. |
| # Posted 2008-01-23 22:22:10 | |
| Swampfox: | Now I can reveal the other part of my trade. Selling the puts was a deception maneuever, and was a relatively small move that I attempted to make appear as big as possible. While the markets were digesting that news, I sold a massive amount of in-the-money calls.
These two moves, when paired together, effectively form what is known as a "Squabble" trade. Squabbles usually end in disaster, except for when they don't. |
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