Someone Teach Me To Be Fu*king Greedy!

[Parsad]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

[sswan11]

Congrats - another brilliant s/t options call!

[zarley]

Oh the regret of selling too soon.  As far as problems go . . . it's not a bad one to have.

[Guest hellsten]

Congratulations!! So far, OSTK also ranks as one of my greatest trades. I didn't use any options. I just backed up the truck at what happened to be the right moment ;D

 

I still own the stock, so anything can happen, but I know I won't loose any money on it.

 

I have been thinking about buying the SD options, but I'm not yet comfortable with using options like for example you and Ericopoly.

[value-is-what-you-get]

Yeah- like Seth Klarman says in investing it's a game of choosing your remorse.

 

When you get killed you bought too much, when you knock one out you bought too little.

 

Look at it in perspective Sanjeev - you moved the needle of your fund significantly in a few days with absolutely minimal (1.5%) risk.  Good on you!

[JEast]

The life of a value investor.  We always sell too soon!  More art than science and we are mainly geeks :)

 

But glad we could sell though.

[Valuebo]

Gratz Parsad. By coincidence I just bought some SD Leaps today. Hope it turns out half as good as you trade! :D

[Liberty]

Oh the regret of selling too soon.  As far as problems go . . . it's not a bad one to have.

 

+1

[PLynchJr]

Congrats!  Now cry me a river. 

 

;)

[Guest]

congrats, Sanj....or, should we say, Hoover of Vancouver! ;)

[CorpRaider]

Nice one!  That's a first class problem you've got there.

[twacowfca]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

 

Statistically, you played it right.  Run ups in price after favorable earnings reports tend to peter out quickly.  :)

[blainehodder]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

 

Statistically, you played it right.  Run ups in price after favorable earnings reports tend to peter out quickly.  :)

 

This seems to conflict with the numerous studies on Post Earnings Announcement Drift.  I would argue that prices tend to drift in the direction of beat or miss for some time (weeks to months) after earnings.  Am I mistaken?

 

Perhaps the play on these options is to have an actual (or mental) rolling stop in place to participate in the drift?  Just a thought.

 

 

[twacowfca]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

 

Statistically, you played it right.  Run ups in price after favorable earnings reports tend to peter out quickly.  :)

 

This seems to conflict with the numerous studies on Post Earnings Announcement Drift.  I would argue that prices tend to drift in the direction of beat or miss for some time (weeks to months) after earnings.  Am I mistaken?

 

Perhaps the play on these options is to have an actual (or mental) rolling stop in place to participate in the drift?  Just a thought.

 

That's often the case to a modest degree except in bearish markets, but the time decay on short term options compels a quick exit while real and implied volatility is high.  Most price curves that I've seen for post earnings announcement drift show a sharp bump up after a multi sigma big positive surprise and then a pause with often a slight decline before the price begins to slowly drift upward.  :)

[boilermaker75]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

 

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

[blainehodder]

Ah yes!  I forgot we were talking about very short duration options.  Great explanation twacowfca.  I stand corrected.

 

Thanks!

[twacowfca]

Ah yes!  I forgot we were talking about very short duration options.  Great explanation twacowfca.  I stand corrected.

 

Thanks!

 

Glad to be helpful. :)

[rkbabang]

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.

[boilermaker75]

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.

 

I think that is what Rothschild was alluding to, that there is more to it because you can rarely, if ever, buy at the bottom, nor sell at the top. The first step is accepting that.

[Parsad]

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever.  Five days ago, I bought Overstock May '13 $12.50 calls.  The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year.  They killed the earnings instead!  I sold my options for five times the money in four days after buying them.  Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch!  :-X  I had bet reasonably big too...1.5% of the fund in the options!  Whhhhhaaaaaaaaaaaaaa!  Cheers!

 

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

Excellent quote!  Cheers!

[twacowfca]

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.

 

If you will read Baron Rothschild's statement carefully, you may discover that your buying strategy is the opposite of his.  The fact that he never bought at the bottom means that he never bought on the way down.  Had he done so, occasionally he would have bought at the low point when such a purchase coincidentally could have been at what after the fact proved to be the bottom.  Therefore, Rothschild certainly avoided falling knives and only bought after a substantial decline had stabilized and a stock had risen off the bottom.  :)

[Guest FFHfan]

You can rarely, if ever, buy at the bottom, nor sell at the top. The first step is accepting that.

 

That's it and it's very hard to do  :)

[rkbabang]

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.

 

If you will read Baron Rothschild's statement carefully, you may discover that your buying strategy is the opposite of his.  The fact that he never bought at the bottom means that he never bought on the way down.  Had he done so, occasionally he would have bought at the bottom when such a purchase coincidentally could have been at what after the fact proved to be the bottom.  Therefore, Rothschild certainly avoided falling knives and only bought after a substantial decline had stabilized and a stock had risen off the bottom.  :)

 

So rather buying something that is sufficiently undervalued as to have a reasonable margin of safety (even if it doesn't turn out to be the bottom), I should learn to time the market better?  :)

 

All kidding aside, I get your point.  I tend to buy on the way down rather than on the way up and that is probably a mistake.

 

[twacowfca]

Baron Rothschild when asked how he makes so much money:

 

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.

 

I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.

 

If you will read Baron Rothschild's statement carefully, you may discover that your buying strategy is the opposite of his.  The fact that he never bought at the bottom means that he never bought on the way down.  Had he done so, occasionally he would have bought at the bottom when such a purchase coincidentally could have been at what after the fact proved to be the bottom.  Therefore, Rothschild certainly avoided falling knives and only bought after a substantial decline had stabilized and a stock had risen off the bottom.  :)

 

So rather buying something that is sufficiently undervalued as to have a reasonable margin of safety (even if it doesn't turn out to be the bottom), I should learn to time the market better?  :)

 

All kidding aside, I get your point.  I tend to buy on the way down rather than on the way up and that is probably a mistake.

 

That's the way Rothschild did it, his secret of success.  That's only one way.  Buffett does it differently, but only with a great margin of safety when he knows the intrinsic value of a company.  In 1973 - 1974 he bought Washington Post (and other bargains) for one fourth its private market value (the most objective way to determine intrinsic value), then saw it continue to tank after he was tapped out. 

 

He had put most of NICO's assets in common stocks that sank way underwater, but he didn't sweat much because insurance companies didn't have to mark their common stock holdings to market then.  It wouldn't have been practical for its regulator to have seized and liquidated NICO when it had almost entirely equity assets on its balance sheet even if the regulator had been inclined to do so because many other insurance companies were in worse straits.

[Uccmal]

Yeah- like Seth Klarman says in investing it's a game of choosing your remorse.

 

When you get killed you bought too much, when you knock one out you bought too little.

 

Look at it in perspective Sanjeev - you moved the needle of your fund significantly in a few days with absolutely minimal (1.5%) risk.  Good on you!

 

I love it.  Apt description.