Is anyone here shorting the living piss out of BP stock?
Too much risk for me...I can't take ANY risk at this point in my life.
But that being said...I don't think they are going to stop this gusher. I think the next year is going to bring uncountable lawsuits and bad PR beyond belief.
They have lost a ton of market cap, and I hope some of the big greedy bastards on Wall Street are looking to short this bastard company right down to $0.00. :mad:
9. The geniuses who handle your money are usually as clueless as anyone else...
They get paid a lot of money to handle your investments, but they have no clue what is going on. If they did they would have all shorted everyone's portfolios prior to the economic meltdown. Why do people who know nothing get paid so much?
but I think shorting stock is the kind of gambling that 401K fund managers are not permitted to do. Still, there are an awful lot of people getting a buttload of money for not even outperforming a bunch of monkeys with a dartboard and the stock pages plastered over it.
5. For a defined level of risk you could simply buy put options.
Edited on Sun May-16-10 10:46 AM by Statistical
Unlike a short (which has unlimited loss) you maximum loss is defined by the price of the option (or option spread).
For example as of Friday's close:
the BP June put w/ $47.50 strike is trading for $2.75.
You could purchase 1 (which gives you leverage over 100 shares) for $275.
Now it has a strike of $47.50 which gives you the ability to sell BP at $47.50 and thus has value if BP is below $47.50 by June expiration. However the spread cost $2.75 per share so your break even would be $44.75. Ever dollar BP closes below $44.75 at expiration you make $100.
To reduce the cost you could open a put spread. Buy one put and sell back a lower priced put.
For example: Buy $47.50 June put for $2.75 Sell $42.50 June put for $0.98
Now your out of pocket cost is only $2.75-$0.98 = $1.77. Break even is now $45.73 however you are capped (max profit) below $42.5.
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