caught short !

[mystical_ag]

I've been caught up in a short position, two days before massive takeover speculation.

I'm not worried about my margin, and my holding is reasonably small.

Hopefully, I'll be able to ride the wave and correct my position.

However, what will happen if I'm still short and a takeover becomes official, or if the company goes private?

 

[Olipro]

erm, to put it in simple terms; you are flying in the face of the odds, are you holding on due to true convictions? foolhardiness? or denial? or just a wish to lose less money?

 

[mystical_ag]

What options are open to you?

Whatever your situation is right now, it doesn't have to get worse.

It's your call, don't mess it up.

Right now, I'm waiting for the speculation to die down - of which I'm prepared for the long haul. Hopefully, the price will stabilise, then retract.

Two options open to me are:
'cut my losses & get out'; or 'short sell more to bring up my break-even price'.

I just want to know 'what happens if a takeover materialises?'. What happens to those people in a short position?

If the takeover does not materialise, then I should be ok.

 

[fibonelli]

Hi MA

Did you set a stop loss? Has the price hit the stop loss?

 

[Hook Shot]

Right now, I'm waiting for the speculation to die down - of which I'm prepared for the long haul. Hopefully, the price will stabilise, then retract.

Two options open to me are:
'cut my losses & get out'; or 'short sell more to bring up my break-even price'.

I just want to know 'what happens if a takeover materialises?'. What happens to those people in a short position?

If the takeover does not materialise, then I should be ok.

This happened to me with takeover of Arcadia years ago you get taken out at the midprice of the last price before delisting (if you wait that long) or the offer price pre delisting.

It's none of my business .... but hanging on in the hope the bidder goes away in not really a good habit to develop.... depending on company sometimes you get more bidders coming out of the wood work....

I say this cos I've been on the wrong end of one or two sharp reversals in my time.
Successfully shorting stocks can be tricky ......... if you want to make a habit of it ....... probly best to take some advice... not me .. but there are a few guys who really know the score on the boards.

 

[Joules MM1]

Right now, I'm waiting for the speculation to die down - of which I'm prepared for the long haul. Hopefully, the price will stabilise, then retract.

Two options open to me are:
'cut my losses & get out'; or 'short sell more to bring up my break-even price'.

I just want to know 'what happens if a takeover materialises?'. What happens to those people in a short position?

If the takeover does not materialise, then I should be ok.

Get out! Simply, get out!........should you find you are right then get straight back in........but you'd have to ask........if you were long on the trade what why would you exit?.......in the instances of take-over offers the first bid is rarely (ever) the last..........prices chase the offer value and often overextend the offer price .......by that I mean if the stock is seeing an offer to buy at $2 and is intrinsically worth $1.50 then the stock is also seen as then worth more purely on a restructuring level.........and when the price is rejected and then re-offered at $2.20 this implies the bidder is chasing........and who else is in for a counter-offer?......what do you think the instrument listed price is likely to do? In a lot of cases the price will drop post take-over but that can take several weeks as the excitement dies away......in the meantime the price has been milked higher and you are paying the interest on the position and you could get stung for any unfoseen stock holder bonus in the form of a dividend............I'm stretching the possibilities as I don't know the code.......

maybe, the question is (without seeing the chart) at which point does the current price appear overextended and due for the pull-back you think should be in mode right now?.

Joules

 

[Joules MM1]

and......the rule of "buy the goss, sell the news" is not a good strategy in take-over specs........least not unitl the ink is dry

 

[mystical_ag]

Thanks all for your replies / advice.

I did not set a stop-loss, as my strategy when going short was to allow for the possibility of the price moving against me up to 20% away. Then correct my position.

The biggest lesson I've learned is avoid short selling potential takeover targets.

 

[Joules MM1]

get confirmation(s)

let the instrument tell you......get a list of signals that confirm your thinking.......a very bullish chart in the largest degree......sure we're in parabola in this look but if a severe reversal were to take place now then most people would miss and likely a gap down would occur so your upside risk is quite large in a short position........pos sizing and money management are a waste of time in this instance, you simply have to get confirmation of weakening of the trend and that's at the largest degree too.......certainly a precarious short trade even at the lower degrees........creatures of bullish habit will repeat.......when cycles are strong, upwards, then the news tends to bring reactions accordingly and profers news in accordance with the cycle, self-fulfilling........so, if your attempting to pre-empt, from a fundamental pov, then keep that thinking available.........understand where the saint is within the index, its weighting and who is likely to playing that weighting......what would they gain from buying while you are shorting?

another gap above the recent price high is now likely to signal an exhaustion of the emotion that's driven the instrument so look for that and weakness in volume.......just when the shorter quit will be the time to sell .......importantly understand the degree of the trend you're trying to .........lots n lots of work to do.......

an opinion

Good hunting mate......

Joules

 

[Joules MM1]

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=&time=&freq=

type UK:SBRY into the code box

addendum to previous post; the chart is a cfd weekly with elder-ray gauge

 

[millsy500]

Hopefully you had a chance to get out today??

 

[mystical_ag]

How did the short go, AG?

I'm still hanging in there.

I'm in a lot better position than last week Friday. Any signs of the price rocketing again, then I'll definitely get out.

The past couple of days has given me breathing time, and it's taken the heat off the take-over speculation. phew !

 

[ns1000]

I'm still hanging in there.

I'm in a lot better position than last week Friday. Any signs of the price rocketing again, then I'll definitely get out.

The past couple of days has given me breathing time, and it's taken the heat off the take-over speculation. phew !

What sort of signs would you expect? Another fund making a takeover bid is likely to move the price as quickly as it did before, leaving you little chance to close off. Is staying in and hoping really going to sort the position? You've been given a gift in a sharp global sell-off personally I'd take it.

 

[Joules MM1]

Tauranga eh........lerved the Mount, hated the tourists........was there for two years........

the larger volume traders, are off-loading to buy at better values, lower and meanwhile you have some late commers puching the enverlope trying to buy the hype which the smart money sees on thining measures.............hence, (weakhands) buy at the top, sell at the bottom........the subtle message in the break-away and the gap left open to be filled are going to act as magnets.........but I'd still expect any pullback here to be in line with the larger degree design which looks up........in which case, shallow

cupla charts of sbry.....some exhaustion here? where Ive drawn the arrow is a nearterm return with other major lines........I'd want to see 513 taken first

for a larger short for a view onto the gap.......I'd want to see more signals.....

Hopefully you had a chance to get out

 

[millsy500]

Tauranga eh........lerved the Mount, hated the tourists........was there for two years........

the larger volume traders, are off-loading to buy at better values, lower and meanwhile you have some late commers puching the enverlope trying to buy the hype which the smart money sees on thining measures.............hence, (weakhands) buy at the top, sell at the bottom........the subtle message in the break-away and the gap left open to be filled are going to act as magnets.........but I'd still expect any pullback here to be in line with the larger degree design which looks up........in which case, shallow

cupla charts of sbry.....some exhaustion here? where Ive drawn the arrow is a nearterm return with other major lines........I'd want to see 513 taken first

for a larger short for a view onto the gap.......I'd want to see more signals.....

Very nice spot Joules, i'm a bit further down the beach! Sunday morning swims are most refreshing!


On your chart with it still making HH's and HL's it would be a tough decision for me to short. Calling tops and all that..
Agreed would be watching for next major res which you mention to be around 580.

 

[Joules MM1]

......... a tough decision for me to short. Calling tops and all that..
Agreed would be watching for next major res which you mention to be around 580.

absolutely right.........following my post on the 11th the price took a quick "hook-em" dip down to 513 on the 13th and then etc etc........looks like we'll get to the largest double top in quick succesion......shallow retraces, again the only oppo to get out of the short if it wasnt already taken

intertestingly, what should not be lost is the resilience of sbry v the ftse and lower indeces and there has been long periods of correlation ........hard to argue with that strength in the face of

comming down with the sniffles........ter ter tescos........



J

 

[millsy500]

absolutely right.........following my post on the 11th the price took a quick "hook-em" dip down to 513 on the 13th and then etc etc........looks like we'll get to the largest double top in quick succesion......shallow retraces, again the only oppo to get out of the short if it wasnt already taken

intertestingly, what should not be lost is the resilience of sbry v the ftse and lower indeces and there has been long periods of correlation ........hard to argue with that strength in the face of

comming down with the sniffles........ter ter tescos........



J

Hi

Good stuff joules, no change really this week. Low volume retrace , shorts still not interested and a successful test? 580 getting closer..... :arrowu:

 

[Splitlink]

This happened to me with takeover of Arcadia years ago you get taken out at the midprice of the last price before delisting (if you wait that long) or the offer price pre delisting.

It's none of my business .... but hanging on in the hope the bidder goes away in not really a good habit to develop.... depending on company sometimes you get more bidders coming out of the wood work....

I say this cos I've been on the wrong end of one or two sharp reversals in my time.
Successfully shorting stocks can be tricky ......... if you want to make a habit of it ....... probly best to take some advice... not me .. but there are a few guys who really know the score on the boards.

I had shares, not a trading position , in ARK, a restaurant chain, a few years ago, when they were taken over. They went up and I made a nice profit which I took. It was not over, though, the shares went up, again, and I could have made more. What goes up does not, always, come down.

I'm afraid, that, when this happens to you, you are on your own. No matter what the advice is, the final decision is yours.
Hanging on is not, always, the best policy. Neither is selling too quickly. Takeovers are are very sticky. Sometimes they are offers which can be withdrawn or refused. Read what the two companies have to say

http://www.investegate.co.uk/index.aspx?date=20061014

Split