• J Mintzmyer
    Loading up on $OCZ puts- 50c strike for Jan14 can still be had for 35c. Buying hand over fist- practically free (dumb) money.
    12/3/13
    Reply (39)
    • jd7: followed you with a conservative amount. The risk of this trade blowing up is still non-zero in my opinion
      12/3/13
    • jd7: That said, I have little experience thus far in bankruptcy and going-to-zero plays
      12/3/13
    • J Mintzmyer: Same- I think I'm maxed on my exposure since I'd feel safer with a Mar14 play. 10% of my portfolio on these.
      12/3/13
    • Studioso Research: What makes you so confident $OCZ will be under 15 cents at expiry?
      12/3/13
    • J Mintzmyer: The underlying is worth precisely $0 and the pump will run out of steam. The short covering should pretty much be over by now.
      12/3/13
    • J Mintzmyer: The deal doesn't close for 60 days so there's a risk of irrationality carrying on til the end of Jan. This is why I said "practically free."
      12/3/13
    • Studioso Research: It seems like there is no specific (new) catalyst for the stock to decline before the January expiry, and
      12/3/13
    • Studioso Research: and even if the deal does close before then, the stock could still remain above 15 cents.
      12/3/13
    • Matthew Lewis: There is no such thing as free money. It's far from a slam dunk that shares will be below .15 on expiration.
      12/3/13
    • Big Pimpin: I've never seen a bankruptcy stock still trade on nasdaq, or nyse. they usually get delisted and smacked with a Q and trade otc
      12/3/13
    • Big Pimpin: What happens with the options when this happens? where are they traded when the stock is delisted?
      12/3/13
    • J Mintzmyer: Every bankruptcy stock drops to $0 over time. The catalyst is the bankruptcy Studioso.
      12/3/13
    • J Mintzmyer: Every time this happens shorts cover, rumors spread and the stock floats for a few weeks.
      12/3/13
    • J Mintzmyer: Go back and look at historical data on GM, AMR, THQ, Bbuster, Borders...
      12/3/13
    • J Mintzmyer: You are right that it isn't a slam dunk by end of Jan, it'd be a slam dunk with a Feb expiry, but odds are we'll be 5c or so in a few days.
      12/3/13
    • Studioso Research: Your trade might be successful, but if bankruptcy and a move to the pink sheets was all that was required,
      12/3/13
    • Studioso Research: then STPFQ wouldn't have a market cap of over $110 million.
      12/3/13
    • Studioso Research: The point is: people holding bankrupt stocks can be more patient than what many would believe to be 'rational'.
      12/3/13
    • J Mintzmyer: Good point- that happened with American Airlines also-- it 2x or 3x from its first trough and took something like 4-5 months to get to $0.
      12/3/13
    • J Mintzmyer: I don't know the underlying story (i.e. is there ANY value to be had in auction in $STPFQ?) If there isn't than the Jan 15 50c puts are
      12/3/13
    • J Mintzmyer: trading at 33-37c spread, seems like a clear 33% arbitrage there. Is it worthless too?
      12/3/13
    • J Mintzmyer: That sucker even gives you a year to drain it out...
      12/3/13
    • Studioso Research: $STPFQ options are closing transactions only - and it's doubtful the stock has any value.
      12/3/13
    • Studioso Research: "Arbitrage" is probably not the right term for what you are seeing - there is risk involved.
      12/3/13
    • J Mintzmyer: There's risk involved in merger arbitrage too. There is transportation risk in 'traditional' arbitrage no such thing as 'pure' arbitrage.
      12/3/13
    • Studioso Research: Good points about merger arbitrage and 'traditional' arbitrage.
      12/3/13
    • Studioso Research: However if buying puts on $OCZ is arbitrage, then anyone buying puts on a stock they believe will decline is also 'arbitrage'.
      12/3/13
    • jd7: J, are you planning on closing at 0.40 or 0.45?
      12/3/13
    • stoudemire24: $STPFQ is most likely worthless..look at bonds. http://bit.ly/18khCZk
      12/3/13
    • J Mintzmyer: 45c, unless for some reason we are like 2-3 days away from expiry and I can only get 40c, then I'll take it.
      12/3/13
    • J Mintzmyer: Studioso-- not really. $OCZ has a guaranteed $0 by the closing of 60 day period (end of January) ex a major left field 1% event.
      12/3/13
    • J Mintzmyer: I'm betting it will approach $0 within 2 weeks of when it will absolutely be $0. It'd be the equivalent of a stock trading at $3.50, with
      12/3/13
    • J Mintzmyer: an ex-dividend date on January 25th for $5 and my options expire January 18th. No guarantee that it'll be $5, but it's literal equivalent of
      12/3/13
    • J Mintzmyer: merger arbitrage, just on the flip side of the equation.
      12/3/13
    • jd7: The bid/ask is at 0.35/0.45 right now. Pleased we've already made back the spead
      12/4/13
    • J Mintzmyer: Notice the massive volume drop today... I expect we'll see 5c by mid next week.
      12/4/13
    • Studioso Research: Has the company given an exact date for when the deal closes? $OCZ
      12/4/13
    • Studioso Research: Also, have they made any comment about delisting or cancellation of the common stock? $OCZ
      12/4/13
    • J Mintzmyer: 60 day closure (end of Jan) without another bid or judge blocking. Typically takes 2-3 weeks to delist.
      12/4/13
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