MOS Short Selling...

I've got to head to bed real soon so I'm going to keep this short. My brother loves Mosaic, a fertilizer company. Their performance is tightly bound to Potash prices so it presents an interesting study. Every time they've had a 4%+ drop in the past six months, it's been followed by another nearly 4% drop, at least in the intraday.

So I'm banking on that happening again.

Here's my play:
Sell -39 MOS @ 122.75
Buy +39 MOS STP TRG+126.00
Buy +39 MOS TRSTP MARK+1.50% WHEN MOS MARK AT OR BELOW 120.00

Maximum loss = $126.75, excluding any gaps and commissions.

Long TSRA, Short MOS, missed on AAPL

So I bought 20 AAPL at $162.60 right before close yesterday. And then I watched it spike amazingly to the $171 point in after-hours. And I didn't hit sell. As I was walking around the office a few minutes later, and then back to my desk, I was wondering why I hadn't at that point. By the time I had come back, it had gone from a ~$160 profit to ($133). Awesome. Ended up leveling out, but I don't want to hold it long.

I've loaded up an interesting play in Mosaic Company (MOS). They had a rough day yesterday and a quick look at their 6-month charts shows that every time they've had a pretty rough day, they've continued to slide the next day, sometimes to much greater effect. But they've always bounced up enough to trigger an upper-limit buy-to-cover, so I've pushed it up a bit high.

My order looks like this:
Sell -20 MOS @ 131.50 LMT
Buy +20 MOS STP 136.00
OR
Buy +20 MOS TRSTP MARK+.10 WHEN MOS MARK AT OR BELOW 129.00

Basically, I want to sell short almost immediately when the market opens. If the stock turns around and spikes up to $136, I'll buy to cover my position, total loss: $100.

If the stock flies through the $129 mark, a trailing stop will take effect such that if it rebounds by more than 10 cents at any point, a buy to cover will take effect and lock in some profit. If that hits, minimum locked in profit: $49 or so.

Might turn out that I'm fucking up how I place limit orders with shorting, but I'm learning the platform and figure my stops are in place to protect me from my own stupidity.

This will be my third roundtrip if it executes, so it's a good thing I'm leaving. I need to liquidate my Scottrade positions or convert them into something more stable. Maybe try the DJIA; see if we can see some gains in 19 days. We're past the nasty bank stuff and the rough earnings period, so we might see some bounceback and growth. Berkshire is also trading at a near-6-month low, but I won't be here to lock in the profits on that and Scottrade doesn't have logical/bracketed trades.

We'll see if I keep losing with my position ideas. I need to get the hell out of AAPL as well. I'm going to put a stop on that to make sure it doesn't tank.
Edit: AAPL exit positions:
SELL -20 AAPL STP 156.00
SELL -20 AAPL TRSTP MARK-.26 WHEN AAPL MARK AT OR ABOVE 164

AMD in and out, back in to TSRA...

Symbol	Action	Qty	Acct Type	Price	Total
AMD	BOUGHT TO COVER	500	SHORT	$6.06	$3,037.00
TSRA	BOUGHT	100	MARGIN	$21.55	$2,162.00
AMD	SOLD SHORT	500	SHORT	$6.10	$3,042.98

Can't short in pre-market. Fun. Wouldn't have mattered since it gapped pretty hard. Entered at market at open 500 @ $6.10, watched it climb to the $6.18 range, but held tight, covered at $6.06 for a net profit of all of $5. Woo.

Tessera bounced around a bit more today before triggering my limit order 100 @ $21.55 before closing at $21.87 / $22.10 (A.E.) netting roughly $55. I'm going to set another trailing stop and let this one play on its own again. If it keeps wanting to trade in this range, I might as well ride it each way. I just hope I'm on board when the Amkor news comes through, assuming it's good news.

Also, a veritable bounty of earnings calls coming up over the next week. Time to pick some tasty picks... Bed Bath Beyond, Circuit City, Progressive... and a bunch bunch more the week after.

Looking to short AMD for a day...

AMD just announced a nasty 10% reduction of their workforce due to "deteriorating business conditions." Bad scene. Good time to try my hand at shorting for the first time ever.

Shorting, for those who didn't catch my lesson earlier, is pretty simple: I sell you stock I don't own. Don't worry, I'll make sure I come up with it. I'm just looking to buy it to cover my sale to you, at a lower price than I sold you it for. I sell you a share of Wal-Mart for $50. If I can buy it after a drop to $40, sweet, I just made $10.

Problem? If Wal-Mart doubles to $100, I still owe you the stock. So now I have to buy to cover the stock at $100, and I'm out $50.

I'm going to try to short at the open of pre-market. Which means I need to pass out soon in order to get any sleep. I'll see how this goes. I could easily lose some serious cash on it. But I want to try my hand at shorting and I think AMD could move.

Worst-case scenario: people see the move as prudent, AMD goes up.

A lesson in short selling stocks & more fun with Bear Stearns...

AAPL	126.73	+0.12	(0.09%)
GOOG	419.87	-18.05	(-4.12%)
BRK.B	4,245.00	-73.05	(-1.69%)
Value:	4,791.60	-90.98	(-1.90%)

If I was a bit more active and a lot more forward thinking, there would've been a bundle of money to be made shorting Bear Stearns on Friday. At any point during the day.

(A quick intro on shorting: Shorting or "short selling" a stock is what empowers speculators to make money on a downward moving stock. Essentially, you borrow a share at the current market price and sell it to a buyer. You then promise to produce the share at a later time, ideally once the price has lowered. You're contractually obligated, however, to produce the share whether the price goes up or down.

Example: I sell you a share of Bear Stearns for $50. I don't actually own the share; I'm just "borrowing it" for the moment at that price to sell it. I'm contractually obligated now to pay for the share at some point or another, to cover the short. So, if the price drops to, say, $35, I can cover the short (fulfill my obligation to provide the actual share I already sold you) for $15 less than I sold it for. I sold you a share for $50 that I paid $35 for, but I had to wait for its price to go down to make any money on it.

There are plenty of issues with selling short. Least of all is that, instead of a typical long position in the market, in which you can ONLY lose what you put into it (excepting purchases on margin, where you borrow broker money) and your potential earnings are unlimited—the stock can continue to go up forever. In a short, I can sell you a share at $10. If the price of the stock rises to $100, I still need to cover that sale, except that I have to do so at the market price of $100. I'm out $90. Worse still, I can only earn a MAXIMUM of 100% of the stock's value, and that's only if it bottoms out completely to 0. I can't earn any more than that.

So I have exactly the opposite risk profile: potentially unlimited risk with limited earnings. (In actuality, the broker would issue a margin call once the price raised past a certain point to ensure that you covered the short before it reached a point you could no longer cover.)

That being said, I could've made a bundle selling short BSC. There was chatter of it bouncing back to life on Monday, with BSC moving their earnings call forward, but then the news broke that JPMorgan Chase was buying them for $2/share. From $30, the deal forced an open at $2/share.

So why did it end up closer to $4? People covering shorts, but only a small portion. A lot of people are viewing it as a cheap lottery ticket at this point. There's talk of another suitor coming along with a better offer. Consider: If you buy a 1,000 shares at $3, and another firm offers $10/share instead of the $2/share not yet approved by shareholders, you've made $7,000 effectively. Brilliant.

Why would shareholders or even the corporate governance of BSC reject the deal? The bailout facility set up on Friday covers them for 28 days. It's backed by the Fed. The 43 story building that they occupy on Madison Avenue in Manhattan is worth more than the $250M JPM offered to pay for the entire company AND all their assets. Effectively, this makes bankruptcy/complete liquidation a more attractive option for the shareholders. (If you can get more than $250M for the building alone, mark-to-market, then liquidating can provide more value for your shareholders if debt obligations are met properly.)

Either way, the market is taking a nasty hit. Hopefully things correct a bit tomorrow and hopefully the Fed let's failure fail when it's due.