Lehman Is Not A Bear Part 4

Posted by Kris | Thursday, July 10, 2008 | | 0 comments »

Stupid me wanted to make a quick buck out of Lehman Bros. Timing for entry/exit really sucks big time.

BTO - 20 July Put for 2.75 on 1 July 2008
STC - 20 July Put for 2.90 on 10 July 2008

I opened up the position at the LOW of the day. I watched as my position deteriorated as LEH announced stock bonuses for its employee. It fell until 0.80 in just 2 days are LEH breached USD24 before starting to free fall on the eve of 4th of July.

I quickly closed my position today, as i start to dread that i did not sell at the early hours of the trading hour where it reach 2.70 and watched it dropped down to 1.44!!

Then within a few minutes, the stock started to go down again and soon it reach the 2.70-3.00 mark again. I click sold at limit for 2.87 and i got filled at 2.90 and i was happy that i got a higher fill. Then to my dismay , the stock drop even lower and the options got more expensive reaching a high of 4.60!!!

Oh..the pain..For those quick traders, they sure make a lot of $$$. As for me, I just managed to scrap through by only losing my commission.

The thing that i am scared of is the limited life span of my contract which will expired on 18 July and the violatility may collapsed anytime causing my options to lose value more quickly.

Today only, the violatility for the July Contract spiked from 129 to 200!!!

Time: 11:07pm...LEH is showing signs of life..options is now falling to 3.00 and violatility is at 153.

Conclusion: Super spiking...Wanted to sell the PUT ~4 but no enough $$$ in my account..(Margin requires around x2 of what the premium I am going to received).
I expect violatility will collapse soon unless LEH suddenly announces FIRE SALE!! CLOSED SHOP. Coz I may be very wrong nowadays..sigh