Or maybe we should call the company Middlebroke. Going into the day, [[MBRK]] was my largest position. I cannot find any explanation for the beat down it took.
I do not know if I’ll get another post up tonight. I’m going to sit here and figure out what to do with this fucker when the market opens tomorrow.
Geez. Brutal. Was there news? I didnt see any. Its up 6% AH. The volume was heavy…could it be a leak? Maybe someone wanted out at all costs for an unrelated reason?
You have to see a pop tomorrow methinks.
holy shit, man. wtf??
looks like there was some obscene $5 put activity going on today.
Aris, what does that action mean to you? Would it be that someone noticed all the put buying, got scared, and started selling? Or possibly the bastard bought the puts and then started selling.
I’m scared there has been a leak.
ah yes, the curse of the momo’s
live by the sword, die by the sword my bother
in all seriousness, thats fucked up, sorry, i have been there more than once
good call on oil, btw!
Aris, the 3,105 puts bought today correspond closely to the volume level. Thoughts?d
Whoops, actually it only equals 300K shares.
Anyway, someone is betting huge on June and July puts that this fucker doesn’t see 5 again.
Dammit. Something has leaked.
Thanks Null! I should have just stuck with Oil!
It’s probably from that stupid conference, no?
I mean this in the kindest way possible, but sometimes, when stocks go from $1 to $4.80, they are subject to profit taking.
Sorry you got hit. You’ll rebound.
That was 3 months ago asshole.
(after researching MBRK)…
playing momo with biotechs is like juggling chainsaws – you are a very brave man
i am very interested to see how you handle this, and your associated reasoning/thought process
Mdawsz- where ya been brother? Good to hear from you.
Null- there is likely not much difference between being brave and stupid. I’ll be happy to detail/update exactly what I do.
Considering the fact that Morgan Stanley is supposed to be shopping them, it is reasonable for me to assume some asshole deal maker crossed the wall. It would probably be wise then to just close out the position in the morning, on any bounce.
Or, it could just be some fucker hedging with the puts.
I don’t know. I’m not down a whole lot on the position. I’ve just lost all my unrealized gains.
Scarlet Poltroon,
Incisive, penetrating, on-point as ever I see.
jog on
duc
Wood,
Recap;
*No news
*Hasn’t violated your stop [or risk management]
HOLD.
It would seem to be a massive shakeout, which happens all the time. Notice the number of times the 50 is breached to reach the 200…then business as usual. [Other stocks, not this stock particularly….generalising a bit here]
Of course, this time could be different, so manage RISK.
Should it violate your risk management, then, CLOSE.
Otherwise, welcome to volatility central.
jog on
duc
this happens every day with the cheap momo stocks.
If i were you i’d rip the band-aid as Brian Shannon says, sell and move on with life.
if for some weird reason you believe the stock is going back up you can sell the stock and try to split the spread on the Sept. $2.50 calls. The spread is wide but if you can get in the middle you will be able to capture most of the upside from here for about a 1/3 of the risk of owning the stock.
Wood,
Wrong ticker…but possibly, people were confused?
SYMBOL EVENT TITLE LISTEN TRANSCRIPT/BRIEF DATE TIME(ET)
MBRX Metabasis Therapeutics at Canaccord Adams Diabetes & Obesity Conference 6-Jun-08 3:40 PM
MBRX Metabasis Therapeutics at Jefferies & Co. Annual Healthcare Conference 26-Jun-08 11:45 AM
MBRX Metabasis Therapeutics at Collins Stewart 4th Annual Growth Conference 9-Jul-08 9:30 AM
Conference calls are held by management to provide information on a variety of subjects, such as their recent results, outlook, and breaking news. Individuals now have the opportunity to listen to the same calls that only investment professionals had access to in the past. Click on the “Listen” icon to hear the call.
Born, I’m not well versed in options. Can you explain a little more? TIA.
Duc, it closed so close to violating my risk level that it makes it difficult because I feel fairly sure it will violate the level on the open but recover into the close. Of course, it could always keep tanking, and never look back.
I feel that selling here will be selling into hell, which is never a good thing… I mean a month ago, I added to the position, not too much higher from here. But, it hadn’t dropped 25% in one day.
Sacrifice(sell) a few shares to the Market Gods
Toss a maiden into the volcano.
We have a weakness for sacrificial lambs.
We may take kindly to your offering.
Or we may not.
Wood
You are fantastic at TA. I truly look foward to your posts. I am amazed at your charts on the major indices. I know this advice won’t help right now, but don’t mess with stocks under $20.
sorry to hear…………………… 🙁
another point for buying stocks with earnings. bios and airlines are the worst fucking horses ever.
shed, I am sorry for your loss. I would get the feezy out that piece. Especially if it bounces tomorrow.
godspeed friend, godspeed.
Rule #1
Don’t trade stupid stocks under 10 dollars a share.
Not fundamentally stable:biz.yahoo.com/ap/080513/earns_middlebrook_pharmaceuticals.html?.v=1
The company had a $7.4 million charge for warrant expenses due to warrants that were marked to market.
What the hell, why so much expense to warrents when their revenue from their current drug is 2.4 million. Smells like a company with priorities “not towards the common shareholders.”
I would sell at or above 3.5 and take the loss. Something does not smell right when there is a firesale with high volume in biotech stocks.
Justin, thanks. That’s really cool of you to say that. I really appreciate it.
Danny, I’m thinking it can’t hurt to sell some on a bounce, get it down to a half position…
International, I do not disagree with you. However, if the goal of the company is to get bought, with a significant mark up, then the warrant issue doesn’t matter as much to me. Still, it stinks, badly.
Anyway, I had 6% of my total equity in this. So, I’ll live to trade another day. I don’t want anyone to think this is going to blow me up. It was a shocker after a really nice run I’ve been having.
wood, the option activity and the price action reeks of shenanigans. typically, somebody places the big options bet on insider info, and then the broker piggyback/pile-on begins. if it’s bogus info, the stock will rebound.
right now, i’d say there’s an 80% chance it’s going to go against you.
as a reverse example, i bought NUE the other day, because the call options exploded on no news (at the time), and i believed it was leaked info. turned out it was, as you could see by today’s press release.
also, it was more like 9,000 contracts, if you include july. they’ll probably have doubled their money by tomorrow afternoon. that’s roughly a cool $1M overnight, if the majority belong to one buyer.
although, in the interest of balance, there are also 9,000 call options open, so it’s possible this is some options spread, but i don’t know if i believe that.
Thanks Aris. I was hoping you’d say something different. Alas, I agree with your assessment.
You guys ever wish you were like gazzillionaires, and could just pile long into this stock in the a.m., completely fucking these bastards with a red-hot ram rod? I mean, imagine their surprise when you just start hitting every single offer, with as much as you can. Fun to think about.
Some of the best yahoo msg. board posts I’ve read in a long time. This is an attempt to explain what happened with MBRK and the puts today. Not being a big options player, I would appreciate any comments or interpretation about what is written here.
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_M/threadview?m=te&bn=51440&tid=4871&mid=4871&tof=1&frt=2#4871
haha – i think about that daily. no such luck, i’m afraid.
i used to work at a buy-side firm, and i’d see traders frequently swing a stock from their orders alone. it’s like steering a battleship – anything in the way gets pushed aside. this was before basket trades became popular. they weren’t able to hide their trades very well back then.
i think your link is fouled up, wood, but i’ll go over and see if i can find it.
Aris, it works, but you have to cut and paste it. I’m dumb when it comes to html. Sorry…
no worries. i just read through what i believe is the correct thread.
some of those posts have the air of a conspiracy theory and possibly some wishful thinking. crazier stuff has happened on wall st, but my first thought is still the ‘inside info pile-on trade’.
also, i’d like to know who that ‘broker’ supposedly is.
Me too…
I guess my doubt is that the broker would punish the stock to get hedged. I don’t think so. So that leaves the inside-info pile on trade.
Wood,
I’m probably telling you something you already know, but FWIW…sell it and move on. Count it as part of your tuition for market education. There are other fish to fry. Get rid of it. You don’t need a stock like that causing you daily frustration and draining you of energy. Why keep looking at it?
We all learn hard lessons at some point. Been there, done that. I have a rule that I never let any of my top 10 positions be a bullshit stock under $10. It’s never worth the aggravation in the end.
Good luck with it.
Sound advice Dawg. Thanks!
I would sell MBRK now above 3.6
Sold half at 3.59
Concerning MBRK:
From 950 to 1010 i read the chart as bullish…the smooth buy and the declining buying interest also. Comments?
Good move Wood. I had a similar experience last year with CHTR during the Bear Stearns hedge funds blow up. I accumulated the stock over a year, it was my largest position, then within days it went from $4.93 to $2.97, i kept resisting selling at the low but finally gave in and sold around $3… it proceeded to go down to all the way to 60 cents before recovering a bit recently.
As for the options, I like to buy in the money call or put options on positions that I am not so sure about. By buying in the money option you track the move in the stock more closely. The deeper in the money the closer the tracking but the smaller the leverage.
Out of the money options give you bigger leverage but are not as sensitive to price movement.
IMO out of the money options are a “gamble” that requires a lot more insight than i have.
In the money options on the other hand are simply a way to get leverage without using margin and to capture the same exposure with less capital.
I just discussed on my blog buying in the money call options to add to my RACK position instead of purchasing more stocks as it is already one of my largest positions.
hope this helps.
????
WTF born2choke 1st P is fine, 2nd P is like talking to a wall.
Groupie, I can not look at the tape from work. I’m going on gut instinct here, and leaving the half position on for at least until the afternoon.
an example maybe in order. MBRK is currently trading at $3.60 as i type this. The Sep 2008 options expire on the third Saturday of September. Currently the call option at strike of $2.50 is trading at $1.45 bid vs $1.80 ask. The call option at strike of $5.00 is trading at $.40 bid/$.75 ask.
Instead of holding on to the stock you could sell here at $3.60 and buy either the $2.50 call option or the $5.00 call option. For simplicity let us assume you buy at the ask, though you probably can get somewhere in the middle with a limit order.
If you buy the $5.00 call at $.75 cents, you will be able to control 100 shares for $75 instead of $360. But that would only be of value once the stock price climbs above $5.00. Since the strike price, $5.00, is above the current price, $3.60, the option is known as Out of the Money.
Since it will not be of value till the price hits $5.00 it will NOT move as much as the stock itself. For example, the stock may go from $3.60 to $4.60 in the next month but the price of the option may go from $.40 bid/$0.75 ask to something like $.60 bid/$1.00 ask. It would move up but not as much as the stock itself and since the spread between bid and ask is so wide you will still lose money if you try to sell it.
On the other hand if the stock moves up to $7.20 by third week of September then your option would trade close to $2.20 and you would make about 3 times your money even though the stock itself only doubled.
The $2.50 call on the other hand is known as In the Money because the call strike is already below the stock price.
The option price would move in tandem with the stock price. so if the stock goes from $3.60 to $7.20 in the next month then the price of the option could go from $1.45 bid/$1.80 ask to something like $5 bid/$5.30 ask.
if the stock stays at $3.60 by third week of September, your $5.00 call would be worthless, but your $2.50 call would be worth close to $1.10.
If the stock goes to 50 cents, your loss on the stock would be $3.60-$0.50=$3.10 but your loss on the $2.50 option would be limited to what you paid for it, $1.80 much less than your loss on the stock itself.
Apology to born2code…good details.
IG, what are you talking about?
Born 2- thanks very much for the explanation.
no one knows whatthe fuck this dbag is talking about
wood, yesterday’s entire option mania has been unwound already. somebody profited big from those puts.
Aris, thanks for the update. Awesome play, by the big dick swinger, whoever he is.
IG, not being very well versed in options, I appreciate the clarity from Born2Code. Also, there are likely many others that feel the same way.
Wood,
He’s simply talking about the delta.
To see the sensitivity of the delta, look at gamma.
DIM have delta of 1.0 or close
ATM have a delta of usually 0.55
gamma will calculate how sensitive the delta will be to a move in the common
jog on
duc
Bull Flag forming in MBRK? am i reading this right?
4.5% higher after the bull flag..wow!
MBRK is ripping
based on the action today, i’m inclined to believe there was a large seller yesterday (for whatever reason), causing some heavy put activity as a piggy-back trade, causing more downward pressure until the seller was out of inventory.
this is just speculation on my part, but i enjoy trying to deduce market anomalies.
anyway, wood, it looks like selling half was a smart move. now you can still enjoy some upside while reducing your exposure.
Wood,
I have continued weakness on the XLF using RSI(2); can you confirm this? I wanted to buy some banks on this pullback, but it looks we are looking to see continued weakness.
Big MIke, its not there yet. I’ve got RSI2 on XLF at 15. Still too early for buying. Let it get hammered Monday, then check the RSI. If it bounces first, so be it. There is bound to be another ETF that is ready to go.
Mike, don’t think sectors as much as indexes. Those trades are money. Trust me.