Trading Update: AGN, AN and other puts
A few thoughts today.
I am concerned that the Fed's short selling moves will scare others into covering positions - pushing up stock prices. Good for our calls, bad for our puts. Also, this is expiration week for options so strange things can happen. With the exception of AGN (expires Friday) we are protected from major swings.
AGN - It looks like it won't drop much so I think I'll be closing out today. Hopefully I can get $4
AN - It has slid more than I expected and I think I will ride it down more, if possible
http://finance.yahoo.com/q/op?s=AN&m=2008-10
According to the above link, 31K put contracts were bought yesterday for the Oct $5. That's a big bet against
HOG - Down ~8% in a few days. Yesterday's rebound troubled me because it came on high volumes. They report tomorrow and it could be a buy-on-the-rumor-sell-on-the-fact. Anyway, Harley is in trouble in two ways, and it might take another quarter for the accounting to reflect the reality.
First of all, harley sales are bad but they stuff the channel. That will make sales look bigger than they really are. But eventually this game playing stops. I think that next quarter, not this quarter, is when the house of cards collapses.
Second, HOG is a financial company. They made loans to sell the bikes. Apparently they have a lot of non-performing loans: Level 3 assets are ~$400M. Level 3 assets are assets with no known value - this is where banks are putting subprime loans. Apparently, so is Harley. HOG is playing games to hide massive debt exposure. Oh, and they have $700M in bike financing as well.
The combination of weak sales and weak financials may need another quarter to play out. These puts go out further than that, so it's not a problem. I'd like to wait and see if HOG can drop to $20
NKE - An upgrade pushed them higher. I think US business is weakening faster than expected. Nevertheless, a fall to $50 would be nice so that we can exit.
VMC - After drifting close to $50, the stock shot up on the back of a dividend and a drop in oil prices. I am hearing about a lot of cancelled projects, so I don't think VMC is sitting on a strong backlog of work.
ZLC - It shot up 10% yesterday, but I am telling myself that it is on weak volume and without conviction.
I am concerned that the Fed's short selling moves will scare others into covering positions - pushing up stock prices. Good for our calls, bad for our puts. Also, this is expiration week for options so strange things can happen. With the exception of AGN (expires Friday) we are protected from major swings.
AGN - It looks like it won't drop much so I think I'll be closing out today. Hopefully I can get $4
AN - It has slid more than I expected and I think I will ride it down more, if possible
http://finance.yahoo.com/q/op?s=AN&m=2008-10
According to the above link, 31K put contracts were bought yesterday for the Oct $5. That's a big bet against
HOG - Down ~8% in a few days. Yesterday's rebound troubled me because it came on high volumes. They report tomorrow and it could be a buy-on-the-rumor-sell-on-the-fact. Anyway, Harley is in trouble in two ways, and it might take another quarter for the accounting to reflect the reality.
First of all, harley sales are bad but they stuff the channel. That will make sales look bigger than they really are. But eventually this game playing stops. I think that next quarter, not this quarter, is when the house of cards collapses.
Second, HOG is a financial company. They made loans to sell the bikes. Apparently they have a lot of non-performing loans: Level 3 assets are ~$400M. Level 3 assets are assets with no known value - this is where banks are putting subprime loans. Apparently, so is Harley. HOG is playing games to hide massive debt exposure. Oh, and they have $700M in bike financing as well.
The combination of weak sales and weak financials may need another quarter to play out. These puts go out further than that, so it's not a problem. I'd like to wait and see if HOG can drop to $20
NKE - An upgrade pushed them higher. I think US business is weakening faster than expected. Nevertheless, a fall to $50 would be nice so that we can exit.
VMC - After drifting close to $50, the stock shot up on the back of a dividend and a drop in oil prices. I am hearing about a lot of cancelled projects, so I don't think VMC is sitting on a strong backlog of work.
ZLC - It shot up 10% yesterday, but I am telling myself that it is on weak volume and without conviction.
posted by Andrew at
5:24 AM
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