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Keurig Green Mountain, Inc. Message Board

  • pjlouie13 pjlouie13 Sep 22, 2011 11:27 AM Flag

    what to make of this???

    Is there any way to see if some mutual fund is liquidating position? A lot of down volume. Then some hedge fund trying to prop it up?? - PJ

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    • Wow! you stay up a lot later than me! Thanks for the info again. So you sell the puts not buy calls? I've noticed that they are very expensive, puts $6 out of the money trading for $7 seems very rich but at least it doesn't tie up as much capital as shorting out right. My conviction is usually pretty good but I'm at a crossroad with GMCR. Is this the beginning of a 25% correction that this stock pulls from time to time or just a dip on the way to 125?? I still feel it goes up much higher before earning. I think that is the psychological number for this stock, that it runs to before falling apart. It was 300 for NFLX, 100 for Tzoo. If you look at a 5 year chart on all these stocks and look at the point that they break out, multiple that point by 6 and you get the price they rollover. I know sounds like tea leaves but it's uncanny. For GMCR it was 25... So 125. A lot of time from now to earnings so a correction for a health run up is very possible. Thoughts? - PJ

    • Actually PJ, I'm here to learn along with you. I'm still learning to trade. My strength is not trading. It's understanding value creation, value capture, competive strategy and Macroeconomics. Those allow me to have sufficient conviction to see positions through and make money.

      Historically, I didn't use spreads. Until August, volatility was pretty low and options were cheap (too cheap). I am just looking into using this approach myself, as opposed to the daily or even intraday repositioning that TF likes to mock me for (but which allows me to be well ahead even while GMCR remains close to where I initiated).

      I hate to recommend any specific trade (I don't mind taking risk on myself, but without knowing someone else's fin position and risk appetite, it's hard to know what is appropriate), but I am looking at buying $105 puts and selling puts somewhere between between $75 and $85, depending upon maturity. I moved further out on the maturity today. I expect a choppy ride down with hedgies shaking out weak shorts frequently along the way. The degree of complacency on all the MOMO boards tells me there will be institutional selling (you get liquid while you can in a market like this, especially when tangible net worth is a small fraction of market cap). But, using a spread reduces the cost and risk if it moves against you or doesn't move down as much. My spread is wide because I think this company has a lot of room to drop. Longs wildly underestimate the many downside risks (I won't repeat). New institutional money will not (IMHO) come in before we test the 82 August lows or we get some strong macro signal that recession is off the table.

    • No. The large holders need to make sure this doesn't tank. They've been painting the tape on technicals for awhile now. As someone just commented, some technical support level held...

      Don't expect it to drop fast. It will drop slowly for awhile before it really does drop. And, I expect that there will be a LOT of fast money taking out weak shorts along the way.

      Take a position that you can manage for the long term. I'm not kidding, long term this is heading south. The stock is already pricing in huge system growth, international growth, additional categories, etc etc. It is NOT pricing in a material recession, not pricing in a creative competitor (something like the foundry model), etc...

      We'll see what happens. I will be tracking fund holdings... I suspect that someday, some of the holders of those 401Ks will want an explanation...

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