AJB7

Zero Shorts: Beware 'Free Money'

Cicco wrote <I was able to find 500.000 shares to short GM. Why shouldn't I? I'm selling 500.000 shares at 1.19 and selling 5.000 (500.000 shares) Put options June Strike 2.00, Price 1.36. I've margins large enough for a X3, why not do it, company will be BK in 30 days>

It looks like your trade will make about $80K at GM zero. With protection of the long 2 strike june call at .10, you still will make $30K. Without the long calls however your position risk is unlimited and you could blow out on a freak occurance.

I've been on Wall st quite a while. I've known quite a number of millionares in the morning who were broke by the afternoon because they took unlimited risks for "sure things". Pretty much the same thing happened to Long Term Capital which should have known better. 99 times out of 100 you'll be right. But when you're wrong (and you will be wrong in the long run) it'll be your last trade.