1. rider997's Avatar
    A well reasoned and researched article to start your morning...

    BlackBerry Shorts Have Little To Gain, Much To Lose - Seeking Alpha
    ibpluto likes this.
    02-28-13 10:31 AM
  2. wjptam's Avatar
    Who the heck takes a short, without taking a bounding out of the money call position as insurance? Naked shorts in general are dumb.

    Assuming all the author's assumptions are true.

    The maximum liability for a short covered by a $14 call with a September strike date is $3.16/share or -23.6%. All assuming today's market prices ($2.52 for Sept call with strike price $14, a current stock price of $13.41 and an annualized T-Bill Yield of 1%.

    That is comparable to the downside risk a long position expressed under his worst-case scenario.which is $13.41 stock falling to to $10.68. This is a -20.4% loss.

    The upside for long positions is better but the validity of his assumptions remain to be seen. A better way to get into a long position might be to buy $14 calls and limit risk to $2.52 by not actually buying the stock. The break even point would be if BB gets to 16.53, which should be easy peasy and $33 is the most likely price of the stock going forward. If he is out to lunch the maximum risk is 18.8% of the current price of BB stock.

    If you don't understand concepts such as of covering shorts with calls, using calls or puts to limit down side, it's best not to play around with this stuff. Bankers make money acting as middlemen no matter what happens to the stock.
    Markymark 23, OMGitworks and Sqoon like this.
    02-28-13 03:42 PM
  3. dracolnyte's Avatar
    really? a topic about investing/financials/stocks in the OS section?
    02-28-13 04:04 PM
  4. Marc_Paradise's Avatar
    Probably belongs in BBRY
    dracolnyte likes this.
    02-28-13 04:05 PM
  5. rider997's Avatar
    Thanks mod.
    02-28-13 08:54 PM
  6. dbmalloy's Avatar
    Those shorting the stock do not obviously do not think so...as they are in for millions in potential loss.... truth will be told March 28 2013.....
    02-28-13 09:29 PM
  7. E_J's Avatar
    I have a feeling that things are going to get a little crazy right before the 28th, should be interesting.
    02-28-13 09:44 PM

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