Verasun Gets Killed

Verasun tanked over 70% Wednesday after predicting an enormous loss on record corn prices. I predicted its demise here and actually purchased out of the money puts in anticipation of such a precipitous decline.

Unfortunately for me, I only purchased out to the August expiry and this event occurred a couple weeks too late. However, for anyone that heeded this advice and went with the September puts via the same rationale, it was a windfall today.

The stock dropped from ~$4.00 to ~$1.40 per share and boy, did the Sep $2.50 puts pay off!

These options contracts rose from 5 cents each to $1.00, a 20x return on investment.

I seem to have a knack for just missing enormous market moves that I blog about and don't quite hit right in my actual trading patterns. Check out this post where I missed out on a $25,000 (6,000%) gain overnight by predicting the buyout of AQNT the night before it was announced!

I can rest easy knowing at least I got one of these right this year -580% in 2 weeks on a biotech play.

Comments

[fives:]

If I remember right you said the catalyst for collapse was the Texas decision on the tax credits. these are disjoint events! Please don't take credit for calling the deflation of VSE stock prices on a faulty premise. it is like saying Noah built the arc cuz he liked to ski.

2008 Sep 19 01:52 AM

[fives:]

If I remember right your premise for the collapse of VSE share price was an unfavorable decision on the Texas tax credit. Please do not claim you are a profit under false pretense, it is like claiming Noah built the arc cuz he liked to ski.

2008 Sep 19 01:56 AM

[Everyday Fi...:]

Apparently, you didn't read the opening sentence of the post:

"There are several confluent factors driving the demise of ethanol in the US and there are ways you can profit from the high price of corn."

Several factors...

The Texas decision was one bullet point, which would have caused a one-time blip. I've been posting on the demise of ethanol, the biggest haox pulled on the American public, for over a year now.

btw-called pivot bottom on UYG Financial 2X ETF and I'm up over 40% in 2 days. Should check out EverydayFinance, you might catch a good play!

2008 Sep 19 08:22 AM