Didn't you post that you exited your trade at +5.3?
At what price BP?
- Thread starter Swan Noir
- Start date
Didn't you post that you exited your trade at +5.3?
Yes, but only the USA awards nutty damages. Every other country in the world will award like 1/10th or less of what the USA would. Judges award damages in the UK, not juries. Political risk for BP in the UK for a US spill is pretty darn low. Besides, there's a big difference between filing a lawsuit and actually winning one, and a difference between winning and getting paid.
Unless I'm missing something big, BP is pretty safe from any serious liability outside the US.
If BP America ends tomorrow the total BP as best I can come up with would drop in value about half. They could let BP america fail and still come close to keeping the dividend or for sake of arguement cut it in half and be the same as they are now. With that being said if you cut the company in half you have a company with a PE of 10 and a yield of 4%+.
I am sure that the main BP corp would be subject to lawsuits but I do not see how anyone could collect if they simply wrote off America. Then you also have the fact that someone has to take over the assets and that could be BP America 2.0 or something along those lines. 100s of billions of dollars of exposure? I think anything is possible but that is really pushing it to an extreme.
I am clearly not happy I stepped in BP as I had my worst day in a while and maybe a top five for the year but it is now trading near the price of the oil reserves. For this stock to go lower one has to believe that the company is taken under by lawsuits including the main corp BP. At some point politics will play a role and I think the damage done while maybe large is not in the ballpark of what the media is saying and leaving us to believe. After all we had a huge leak back in 1979 or about and as we can all see oil is mostly biodegradable and will be gone in a year or two even if nothing was done that would not be done absent the spill. Hotels may have a cause of action but if they can't show that oil is on their beach it is going to be difficult to show how BP caused the hotel harm. Just because the media reports an event does not mean everyone can file a suit and win. An example is if you watch a car crash and someone dies but you are not part of the accident. You can't sue as your not part of the accident and are only a witness regardless of the emotional impact. If a hotel can not show that their beach or water is ruined (and from what I heard on the radio today if I recall correctly only three counties in FL have their beaches closed) I think they may have a lot of trouble showing a cause of action. Just because the media blows it out of reality (not that they would ever do such a thing) does not give a cause of action from what I understand but I am also not a lawyer so I very well could be wrong.
What BP needs is some leadership and this mess will go away like it did for exxon and we will all be wishing we bought as much as we could at these prices. One good news story about the leak being plugged and this stock jumps hard and fast. The day is coming regardless of Mr. Haywards best attempt to let it drag on as long as possible......
Just realised you misunderstood my post. The -5.5 I quoted was the BP change on the day. -5.5 on a simple BP short is more profit than your +5.3 on the spread, and far more in % terms, as well as relative to the max DD on the trade, hence if I had taken up your bet I would have won on all 3 counts.
Still, no point in betting with someone online and increasing my risk, when I already had on a full position. Lucky for you I guess
Quote from Ghost of Cutten:
Just realised you misunderstood my post. The -5.5 I quoted was the BP change on the day. -5.5 on a simple BP short is more profit than your +5.3 on the spread, and far more in % terms, as well as relative to the max DD on the trade, hence if I had taken up your bet I would have won on all 3 counts.
Still, no point in betting with someone online and increasing my risk, when I already had on a full position. Lucky for you I guess
I didn't trade any at +5.30. I did offer a prop to dhpar over 60 days duration. One day wasn't the proposition.
The "5.30" spread price occurred when BP was down and DO was up, so again, the spread beat BP outright, at all locales during the day, as DO remained in the green.
Edit: DO closed UP, and it is trading $0.30 higher AH at the bid... the switch beat BP outright at the close and AH, so try to spin that.
I absolutely concede that the outright short BP R/R was a better proposition over the two days, but that wasn't the wager (60-days). Additionally, today's positive close means that the switch outperformed in absolute terms, but lost yesterday.
The BP/DO switch closed at a multi-week high, but the outright BP short took virtually no heat.
The var on the DO/BP switch (+4.30 to 6.00+) was superior today to BP outright, inferior yesterday.
My apologies to Cutten.
The BP/DO switch closed at a multi-week high, but the outright BP short took virtually no heat.
The var on the DO/BP switch (+4.30 to 6.00+) was superior today to BP outright, inferior yesterday.
My apologies to Cutten.
I have no argument with ROC, obviously the spread trade requires >2x the cap. I was speaking in absolute terms. The return-var on the spread gain (+4.30 to +6.10) today exceeded the BP short (-.20 to +5.50~), but BP beat yesterday.
I will calc intraday and closing var and peak to trough on the position over 60 days, regardless of my position, currently flat.
To be fair I did turn down the bet, as I was just making a comment about the news risk in BP (ironically it turned out to be DO that had the news risk, for one day at least), rather than explicitly saying "BP is going to collapse NOW!". BP was just part of my short book, not a huge directional bet (unfortunately!).