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USG Corporation Message Board

  • mystery_man_444 mystery_man_444 Nov 11, 2004 10:10 PM Flag

    Need some serious advice

    I am in deep shit here to put it very mildly. I am a first time poster here. SO I am not a basher, pumper or have ever made any predictions on this board.

    I bought 30 Nov put contracts around $3 last week when USG started surging. Needless to say, I made a terrible mistake. I am running out of time and stand to lose everything. I never could've imagine not only did USG not retrace but kept surging day after day after the initial news came out. Maybe they want to set up a short squeeze or maybe the market is in a frenzy rallying mode after the election. But hindsight is 20/20.

    Now that these puts are only worth 50 cents at best on today's close. Can anyone offer some serious advice as to what I should do? Should I sell it at the opening bell tomorrow, watch it throughout the day tomorrow or wait until next week and lose it all or what? My intuition tells me there may be a bit of a pull back to $31 (my wishful thinking). What again what the hell do I know.

    Does anyone think USG should retrace tomorrow or even Monday. Would it be a complete suicide to hold it past tomorrow or what?

    Thanks to all that read my plight and to those that offer serious advice. Good luck to all!

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    • Mystery Man,

      Never ever buy short term options unless you can afford to lose 50% in a few days time. They are totally speculative and by asking for advise, it sounds like you are "hoping" more than speculating.

      That being said, consider cashing out of your options at a huge loss and buy some longterm out of the money calls (May or August if they are available).

      But shortterm options are almost always go against you. For example, last month I wrote 30 contracts of the Nov 20 calls. The day of expiration the stock goes from $19.30 to $22.50 and I got called out of my stock which was a big bummer at the time. I sucked it up, and wrote the puts this time, and bought the stock back as if I bought it at $20 (the price I lost it at). So the one thing I suggest is to strategize with the remainder of your money and if it is money you cannot afford to lose, options are gambling and you could lose it all and in that case, just go long the stock.

      Number 1 goal in investing is to sleep at night. I learned it the hard way, but definately learned it.

      Al Cheech

      • 1 Reply to AlCheech
      • I want to thank the person who wrote the May 25 puts for $7 the day after expiration last month! I was so P*SSED when my 30 contracts were taken away from me at expiration, but with your note, it helped me calm down and strategize.

        I was angry because if the calls I wrote would have expired worthless, I would have been able to pay for my trip to Europe (where I was at the time of expiration), but with your disclosure of the trade, I made a similar trade of selling (writing) 50 of the May 30 puts for $9.50 on average as well as 20 more after the election at $7.70. Worst case is I own 7K more shares of USG in the low 20's which is fine by me, but most likely they will expire worthless for the buyer of these options and I will have over $62K which will afford me a trip to Europe for the rest of my life just using the investment income from the profits. So I want to say Merci

        Al Cheech.

    • We're all looking for 3 dollar inefficiecies in the market and cos. like espeed with there computers are exploiting 2 or more decimal points. Never easy.

    • <<It also pays to ask dumb questions.>>

      I'm sure everyone asks that same dumb question at some point - I know I did.

      - regards, wavb.

    • I guess I never thought about it . . . USG should pay a HUUUUUGE dividend . . .

      shorts are safe though, can't pay a div. in bk.


    • OK, got it. And thanks again.

      If you are short as of the ex-dividend date, you are liable to pay the dividend to the person whose shares you have borrowed to make your short sale.

      USG should pay a dividend.

    • Theoretically, you don't lose, because you are right; the stock should go down by the amount of the dividend. You also would not gain, becuase the person from who you borrowed the stock is owed the dividend, just not from the company who is paying it. That leaves you on the hook.

      However, the underlying principal is this; you borrowed that stock. It is not yours. At some point, you will need to return that stock, and provide the owner from who you borrowed it with any interim benefit of owning that stock.

    • i find that holding on to options when you're already losing and hoping for a turn around is worse then letting them go, even at a major loss. you've got time and momentum going against you at this point and the longer you wait the worse it will be IMO.

    • All I can say is that I hope you didn't speculate with more than you can afford to lose.

    • Unfortunately I believe both GRA and USG will track higher tomorrow in anticipation of Grace's hearing on the 15th.

      Someone else may be better able to help you out of the mess.

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