Jackskeleton

yeah, it's a tough call. I doubt it can do much more than 130 price. but it is going to be up there.

B.A.

Shit, I left for a bit and forgot to cover the shorts I had on the SP2 CALL and PUT.

Please fall short of the $130 mil. Please...

gcribbs

I got out of Spiderman calls and puts. I figured I made some money off of it and do not want to tie up my whole port on buying some shares of spiderman.

I am shooting for 12 million by sunday. I think with some luck I can do it.

I guess the month rolled over today so it looks like I ended the month at number 4 on the HSX leader board with a 213.17% increase

Triple S

I'm in.

DVDTalk_TripleS

gcribbs

Welcome


This brings us up to 75 members.

Jackskeleton

who the hell didn't tell me the 2nd wave of summer warrents were out. I missed out on a lot. damn.

gcribbs

I figured you knew

some are still worth buying into. most are waiting for another drop.

gcribbs

The new BW's seem to be selling off again. a couple just went down.

now most are falling down

I was waiting for them to do this.

B.A.

So was I.

Heat

So, can somebody give me a quick disussion on short & cover?

As an example, say I think that Spiderman 2 will go up in price in the next couple of weeks, what would be the way to make the most money on it?

Jonny2k1

Unless you are talking about the blockbuster warrant there isn't anyway Spider Man 2 could be moving up right now, the put, call and the actual movie stock is halted right now since it opens tonight...but the stock will be tradable again after this weekend. But say if you did want to make money on it and it was going up then you would have to actually buy the stock. When something is going down you short the stock (make a profit from the decline) then when it starts to go up, or you think it is going up you need to cover it. That's the way I understand it, but I'm not an expert yet. I think gcribbs knows all about the short/cover game.

Edit: I really need to start reading my posts before making them.

JasonF

First of all, Spider-Man 2 is halted until Monday night since it's opening weekend. On Monday, it will be adjusted to a price equal to Wed B.O. + Thurs. B.O. + [2.5 * (Fri B.O. + Sat B.O. + Sun. B.O. + Mon B.O.)]. So until Monday, you can't invest directly in Spiderman 2 or its put and call. (though you can still trade in its blockbuster warrant, and you can buy or short funds that are holding a position in the movie).

But let's say that Monday it adjusts to $450 based on the above formula. That means the market is predicting that by the end of its fourth weekend of release (i.e. by Sunday, July 25), it will make $450 million. Let's say you think that it will only make $400 million by that point. You would want to short the stock. In real life, when you short a stock, you are borrowing the stock from someone (a faceless someone -- the brokerage agency does this automatically) and selling it. Then, when the price goes down, you buy the stock back and return it -- keeping the profit (since you sold high and bought low). Shorting on HSX is essentially the same -- it's a bet that the price of the security will go down.

To short, simply enter "SPID2" in the Symbol field of the broker box and the number of shares you want to trade in the Quantity field and hit short. Two tips about that -- first, if you enter a negative number, the buy and sell buttons will disappear and be replaced with a second set of short and cover buttons. This is useful to ensure you don't accidentally buy instead of shorting. Second, instead of a number, you can enter "max," and you will trade the maximum number of shares (based on either your available cash or the market limit on the number of shares you can hold in anything.

But back to Spidey -- you're predicting $400 million and you've shorted at $450. Let's say market forces drive the price down to $380. Now you think it's underpriced. At that point, you would want to cover. Simply enter "SPID2" and "max" in the broker and your short position will be liquidated.

The more advanced traders don't just take into account the EDP (estimated delist price) when shorting -- they play the market. Say you have faith in Spidey -- you think he'll make $500 million by week 4 -- but you think the market won't have that kind of faith. You might short under the theory that everyone else will short too, driving the price down. Then, when you feel the price is at its bottom (let's say at $380), reverse your position and buy back in. Assuming the $450 adjust we assumed above, your profit would not be $50 per share, as it would be if you bought and held after adjust ($500-$450=$50). Instead, it would be $190 per share (you made $450-$380=$70 riding the market down, then made another $500-$380=$120 riding it back up).

A few final thoughts: first, don't forget about the 1% commission on each trade, which can be significant when you're dealing with a stock as expensive as Spidey. Second, don't just ask if Spidey is profitable -- ask if he's the most profitable use for your cash. A 20% profit of Spidey is nice, but I'd rather invest that cash in 6 different securities each making 5% (total profit=30%).

Heat

Thanks for the explanation (and to you too, Johnny2K1).

Is succussful shorting and buying the secret to making the big bucks? (I noticed that you have $13M, after starting with $2M)

Mordred

For those of you who have some cash lying around (and I understand it's a lot of cash) there's absolutely no reason you shouldn't have 10k shares of the Shrek 2 Blockbuster Warrant.

Domestic totals as of the 29th were 400m with the 220m Warrant currently valued at $166.91. That means that as of two days ago it was undervalued by a guaranteed $13 and will probably gain another $30 to $40 on top of that before it cashes out. My current gains on it are 391k over the past two weeks, buying in as much as I could at $119 and then fortifying my position at around $135 or so.

Just my helpful tip for the day.

Jonny2k1

I definitely second that, I've had some money sunk into it for a while. I wish I had put some more. When do the blockbuster warrants cash out? I remember seeing a date, but I can't find it now.

benedetto

I'm in.

benedetto

kninestile

I've been holding this for a while as well. I hope the warrant for Spiderman 2 will provide similar results.

JasonF

Here's a post explaining how I made so much money so quick and explaining why BWSH2 is a bad investment. The key is in four little letters:

DROI

What do those letters stand for? Daily Return on Investment. Basically, it's the percent gain you get from an investment for holding it one day. For ports our size (and even up to about $100 million or so), you should be striving for at least 1% DROI. Obviously, there will be bad days -- I've been stalled in the $13-$15 million range for a couple of weeks now -- but that should be the goal.

ROI is calculated by taking the profit and dividing by what you ahev to invest. For example, if you think you'll make a $5 profit on a $10 investment, you are getting a 50% reutrn on your investment. To calculate DROI, simply divide by the number of days you will hold the investment -- if you think you'll get your return in 5 days, your DROI is 10%.

That's a rough approximation -- DROI is really calculated like compound interest, with exponents and all that crap, but for short term holds, it'll do. If you want the real DROI, go to http://www.hsbr.net/servlet/roiCalculator

Now how do you do get a 1% DROI? First, play openers. That's where the big changes are. To give an extreme example, a few months ago, PASON adjust from $131.28 to $262.32 -- an adjust up of $117.18. Since you had to hold it for 3 days (it halted Friday and unfroze on Sunday), that's a DROI of about 26%. Of course, PASON was the largest adjust up in HSX history, but let's look at last week's WCHIC. That halted at $54.36 and adjusted to $64.34. This was a 5 day-hold (it halted on a Wednesday), so the DROI was a "mere" 3.4%. Note that NOTEB's DROI for that weekend was 11.4% -- even though each adjusted up by about $10, NOTEB was half the price of WCHIC before the adjust, and you only had to hold it for 3 days instead of 5 days.

Second, play the bonds, but be sure you know how they work. Bond prices adjust in particular ways, and you can make those adjusts work for you if you understand them. Learn how they work (I've posted explanations before, and would be happy to do so again) and play them. Once you know how they work, you can check out the bond charts at www.hsbr.net or at www.hsj.org -- they do the math for you.

Third, play the market. Keep an eye on the big movers and try to get in while things are still moving. If you've been watching FH911 over the past few days, you'll see that it's making relatively large and relatively predictable movements.

Now why is BWSH2 a bad investment? Look at the numbers. It's currently priced at $166.91. Let's assume it will delist at $225 for a tidy $58.09 profit. But that profit won't come for another 60 days. That means your investment will return you a measly 0.5% per day. There are certainly worse investments out there, but there are also much better investments. I mean, if you assume FH911 will bank $100 million by Labor Day, you can get a 1.5% DROI by buying BW911 (currently priced at about $20 with a $50 strike price).

Hope this helped.

johnglass

JasonF, what do you do for a living? Or do I even need to ask?

JasonF

I'm a lawyer. But I have a bachelor's in economics and I've always been something of a math nerd. Plus I've been playing HSX for aout 5 years now, so a lot of this is econd nature.

Mordred

While I agree with your general assessments about BWSH2 I should point out that it has been gaining around 2.5-3.0 on average per day with usually a big jump on monday-tuesday followed by some profit taking on wednesdays. I expect this to slow down in the next few weeks at which point I'll start pulling money out and looking for more profitable investments.

JasonF

That's a good point -- if you're playing the market (as opposed to buying and holding until delist), it could be a good investment.

kninestile

Thanks for the post Jason. I would like more info about how the bonds work. I have never bought those because I don't understand them. Thanks again for your insightful post.

Triple S

See, I don't understand Bonds either. Say Bill Murray is set to rise whent he adjust is made and according to HSBR, he has about 1.3 RoI. Does that mean I should invest in him right now, or in 4 days?

gcribbs

I will only say that investing in openers can be a great way to make and lose money. I have actually lost money overall on my openers. I have decided over the last few weeks to not play openers very often and instead play the market. This takes a bunch of time so it is harder to earn money this way.

I think it is a better long term strategy for smaller ports like we have since a wrong call on an opener can be huge.

Of course if you do not have the time to invest than playing news and movements and riding stocks up and down can cost you a bunch also.