Have to agree with you. Covered my Dec. $42.50 short puts yesterday and took my gains because the action in the stock since the week after Nov. options expiration has been nothing to write home about.
Reminds me of two quotes I have found useful in life:
"I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it." - George Bernard Shaw
"Never argue with an idiot. They will only bring you down to their level and beat you with experience."
How long are you in on the HLF trade this time? Normally every time you pop in right before the PPS goes on a tear. Nice trade buying on the open.
Only thing I did wrong this week (other than stay away from the market like I said) was to sell my puts not deep enough in the money. Oh well. At of $43 PPS, I have made more money off of trading options around the dip in the stock price than what it has cost me in market valuation on my long shares. If that holds, I think I will take that as my trading feat for the month.
I think you mean Venezuela. And that is what I mean. I expect the sell off to be mainly short sellers piling on to the earnings miss. Hence, I believe short interest should increase versus the 10/31 report.
If he didn't trade on the immediate aftermath, then he can spout whatever nonsense he wants. The gray area would be if the stock price stayed depressed and you can attribute it to that (mis)information.
Given the rather lax enforcement actions by the SEC in general, I don't think they will try to pursue any truly difficult cases. The Feds love to tout their 90%+ conviction rate when going to trial; However, that's because they only press slam dunk cases and love to settle out of court if they have any doubts about a case.
Easiest way to have peace with this environment is to recognize we are living in a second Gilded Age.
Expect short interest to go up... 10/31 report was before earnings. If short interest goes down on a 20%-30% downward move, I'll be concerned.
I have always said the challenge about exiting his short would be how to do it gracefully. He has had several things go his way this year that have enabled him to cover profitably his short shares and the volume to do it. If he was not taking advantage of these opportunities to cover shares / convert to puts I would say he was downright mad. Remember, if he goes into the options market and buys puts, the most basic hedge for the counter party of the option is to sell the shares short in the market (which would continue to supports a high short interest). As such, he ends up taking a large short position through various counter parties in the options markets. I highly doubt we will hear anything else official about Ackman's short position until a few months after it has been closed. Purchases, sales, options activity, etc will all be guesses since the first rule of shorting is to not talk about it publicly.
Ackman hasn't talked about the exact make up of his HLF short in a long time. Given he only disclosed that he switched some of his short bet to puts late last year, it would not surprise me if he has converted the whole thing to a synthetic bet. Open in interest in options supports several large synthetic shorts and everyone and their brother has piled on short this year which has given him ample opportunity to replace his short shares with other short sellers. Of course this is all speculation since short sellers have no obligation to disclose their positions.
One thing I have learned is to never doubt Ackman. He's already carried his crusade on much longer than I thought he ever would. Additionally, he's bought his puts... either they pay or they don't; The money has been spent at this point. So, if he is having problems sleeping its probably related to FNMA.OB than HLF.
My last covered call position just expired. With IVs where they currently stand and the underlying trends I am seeing, I don't think I'll be covering my shares again in the near future. If the current participants in the market keep accumulating the way they have been for the past week, I think you will have some trouble getting those $45's back for less than you paid but that's still 30 days out. Also, I don't know how much further IV will decay at this point (I personally dislike trading HLF options when IV30 goes under 60). I would say your best chance is for share price to stagnate or drop while wearing down the time value on those calls as well. Even if exercised, I would certainly not turn down 10-20% gains on a one month trade.
Interesting end to the day. Looks like the selling pressure I noted made the accumulating algorithm ratchet down it's buy point. The two most interesting aspects of this activity has been the loose band they trade in when accumulating at a price point and the algorithm's adaptability to market pressures to modify its price point.
Think it has a good chance of holding $41... though the accumulating entity *has* pulled out in the last 30 minutes of the market before and let it drop before so nothing is guaranteed. Additionally, the stock has been under distribution for the past hour and Chaikin's money flow has turned negative. So if they stop accumulating, expect a bit of a drop to take place.
However, they've been holding the $41.20 range for the past few hours. Additionally, if you look in the recent history of HLF, there has been near daily 250-300k share transactions occur within the one of the final 15 minute blocks of the past few trading days. The stock will finish up. In the end, I do not see the stock holding $41 today to be critical as there is nothing interesting in the options at that strike.
Next week will be interesting. The stock is still being accumulated by someone even at current prices. If this persists I expect momentum shorts to start closing out. Additionally, still a large chunk of shares to be delivered next week based on the 11/22 open interest. My last synthetic short position from the earnings miss expires tonight. Though I will take next week off for the holidays, I remain cautiously bullish based on the trends I am seeing.
I was recalling the $60 & $65 puts. I had completely forgotten about the $50's. I don't know how much (or if any) of his original short position remains since he has had opportunities to close it out profitably and/or convert it to puts.
I recall his initial short position since I was trading against it at the time. I will give the man his due for the call on the $60 and $65 puts. All he needs to do now is soak up shares in the market to cover and collect a substantial profit. If only I had a clueless senator available to do my bidding... ;)
Based on this: http://www.cnbc.com/id/101343507. Whoever placed the large January $50 put trades indeed was buying time for those puts. Oddly enough, they would have paid off without the roll.
What everyone seems to forget is that most smart short sellers don't talk about their open short positions. That is the one thing that Ack got wrong. Therefore every large trade is now assumed to be from Ackman. If you look at the open interest in the calls/puts, there are plenty of other traders taking large positions in HLF.
I looked up the original articles and the trades were noticed late August. That said, a lot of assumptions were made to arrive at Ackman being behind the August trade. He might be behind it since the trader sold January '15 $50's and will thus receive shares they can use to cover shares promised at $60 & $65. I'll have to look into it further.
I should rephrase to be summer. I just use July because that sticks in my mind for some reason. I don't remember precisely off the top of my head when the large 2016 put transaction occurred.