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squiffy
09-16-2005, 12:53 AM
Is there any low risk way to profit from the DAL and Northwest bankruptcy filings? Stock should be worthless, but is still trading, albeit at a low price.

Short selling would be risky, in that price can actually go up based on irrational acts or manipulation. DAL actually went up in price today. Makes no sense really. But could really hurt you if you are trying to sell short and get a margin call.

Can you sell a put at a low strike price. Say a 2007 or 2008 leap?

BUt what happens to the put if the stock gets delisted?

Anyone, with genuine experience in options or short selling, have any ideas?

squiffy
09-16-2005, 01:04 AM
One article said, if you believe Value Line and Morningstar, the DAL and NWAC stocks are worthless and you should be trying to short.

But article says, you probably won't be able to find shares to borrow and there are special rules that apply to short sales of stocks that are so cheap.

Why can't you find shares. And what are the special rules?

Sniper
09-16-2005, 09:05 AM
[ QUOTE ]
Why can't you find shares. And what are the special rules?

[/ QUOTE ]

1. Too many people have already borrowed shares to short the stock so none are available.

2. You can't short a stock below $5.

09-16-2005, 12:21 PM
[ QUOTE ]
[ QUOTE ]
Why can't you find shares. And what are the special rules?

[/ QUOTE ]

2. You can't short a stock below $5.

[/ QUOTE ]

Of course you can, although probably not best option right now.

mcb
09-16-2005, 12:26 PM
buy stock in jetblue or southwest. the discount airlines are highly profitable even with the 50% hike in the price of jet fuel.

Sniper
09-16-2005, 01:07 PM
[ QUOTE ]
Of course you can, although probably not best option right now.

[/ QUOTE ]

hmmm... I'll clarify... In the US, most individual investors/traders cannot initiate an open short stock position for a stock priced under $5. (You can hold a short that you previously opened when it was above $5, market makers play by different rules, and foreign exchanges have different rules.) You can also buy Put options on stocks below $5.

For more info on shorting:
http://www.daytraders.com/short_selling.html

RiverFenix
09-16-2005, 01:14 PM
Northwest is still rated as a buy by most of the big banks. WSJ had an article yesterday(?) about taking a look at buying some of their stock

jdoe
09-16-2005, 01:42 PM
i tried to short NWAC at 4.50 ish and could not do it.

I did short it on the 2+2 Stock challenge. I am now a Virtual millionaire weeeee!

Sniper
09-16-2005, 06:36 PM
Just a headsup... Northwest Air stock will cease trading on the nasdaq on Sept 26th.

09-16-2005, 09:34 PM
[ QUOTE ]
[ QUOTE ]
Of course you can, although probably not best option right now.

[/ QUOTE ]

hmmm... I'll clarify... In the US, most individual investors/traders cannot initiate an open short stock position for a stock priced under $5. (You can hold a short that you previously opened when it was above $5, market makers play by different rules, and foreign exchanges have different rules.) You can also buy Put options on stocks below $5.

For more info on shorting:
http://www.daytraders.com/short_selling.html

[/ QUOTE ]


Many direct access brokers will allow you to short under $5.

Sniper
09-17-2005, 08:31 AM
[ QUOTE ]
Many direct access brokers will allow you to short under $5.

[/ QUOTE ]

Which direct access brokers do have have personal experience shorting stocks under $5 with?

DesertCat
09-17-2005, 12:57 PM
[ QUOTE ]
buy stock in jetblue or southwest. the discount airlines are highly profitable even with the 50% hike in the price of jet fuel.

[/ QUOTE ]

"People who invest in aviation are the biggest suckers in the world."

David G. Neeleman, after raising a record $128 million to start New Air (the then working name for what became JetBlue Airways), quoted in 'Business Week,' 3 May 1999.