you can take the opposite side of the trade
BNI Puts
- Thread starter TheGoonior
- Start date
Although I think there is still a good chance it will play out, it hit my stop loss, so I'm out, end of story. It was a speculative play, and that happens. Since it's a $100 stock selling at $98, I'm assuming everyone who replied is long? Besides, nothing says that just because it's Buffet that a stock has nowhere to go but up...GE in Oct2008: $3 billion invested when GE was in the 40's. Yep, he got a 10% dividend and preferred stock, but it still tanked over 80% in that time. He's a long term guy and it will be profitable for him over that time frame, but as of right now he's under water big on that play.
lmao.
No offense to the OP, but that was a very poorly thought out trade. Made no sense whatsoever. Of all the things to buy puts on, BNI at this time should be last on your list. (Had you not noticed how cheap they are?
The shareholder's vote will be in January. At that point, *IF* you wanted to take a shot on the merger not being approved (which I think would be a VERY poor bet, but it's your money), THAT would be the time to do it. Certainly not NOW! It's 'cement' for the time being.
There is another possibility that might interest you down the road. Since it's an election merger, the options will be adjusted according to the non-electing terms. If the non-electing shareholders don't wind up with $100 cash, then I believe you'd be getting a put on BRK attached to the BNI puts.
Another possible play would be if the markets tank over the next few months, and you bet that BRK will go below the lower-bound of the collar ($79,744), in which case the deal will be worth quite a bit below the $100. Again, not a bet I would take. The odds of BRK declining app. 20% between now and the deal closing are very small.
Disclosure: Open position in a BNI April put credit spread.
It is clear from this post and the trade that you just put on that you have a lot to learn about the mechanics of the stock market. I'm not saying I know it all, but I am saying you don't know it all.
1. No, I'm not long. I'm just responding to a very terrible trade. You are shorting a 100 dollar stock at 98 dollars!!!! Just sit and think about your trade for a minute. Think about the probabilities of it working in your favor.
2. First of all, buffet didn't acquire GE. He just bought a large stake in them. Buffet bought out BNI, meaning he bought all the shares. Meaning there are plenty of GE shares left to go around to make the stock volatile. But, in a few months BNI will have ZERO shares left to the public.
Second, I have no idea where you got your facts there, but you are off. GE was in the low 20's in Oct. of 2008. With that 10% dividend he is probably getting very close to even.
You obviously do not understand the fact that Buffet bought out BNI and the shares will close to the public at a price of one hundred dollars in the near future. I do not think you know what a buyout is, or how it works. That leads me to believe you are lacking in other fields of knowledge pertaining to the stock market. I suggest you seriously should read up on the ins and outs of the stock market before you risk much more money. Check out investopedia, they have some good intermediate stuff. I understand you probably will not take this advice, and be defensive. This is unfortunate. Good Luck. Your gonna need it.
I placed this post with the desire to get feedback, and I got it. That it is about 100% negative is not a bad thing in my opinion and actually more educational for me...You learn something(or some things) from every trade you put on, win or lose and like every market lesson, this one cost me some money. And, as with any losing trade, I analyze it to see what things I did wrong and work to eliminate those and things I did correctly and attempt to continue those.
Thanks for all your input.
P.S: Yep, I threw out some bad numbers on the GE (was glancing at a 5 year chart and I just mis-read it). As mentioned, it was actually around mid-20's when Buffet purchased it in Oct 2008. I did dip below 6 in Mar of this year, so at that point he was downabout 70%. Currently I'd say he's probably ahead as GE is right about where he purchased it.
Anyway, thanks again for your feedback.
Thanks for all your input.
P.S: Yep, I threw out some bad numbers on the GE (was glancing at a 5 year chart and I just mis-read it). As mentioned, it was actually around mid-20's when Buffet purchased it in Oct 2008. I did dip below 6 in Mar of this year, so at that point he was downabout 70%. Currently I'd say he's probably ahead as GE is right about where he purchased it.
Anyway, thanks again for your feedback.
For my education...Buffet is offering $100/share or equivalent of Berk shares (referencing the previous post).
What is the reason that BNI is currently trading at a discount to that value? (Right around 98-ish) Is it simply because the deal hasn't gone through yet and people are holding back? Will the price slowly track up to $100 as we get closer to the actual date?
If the big money could buy something at a discount, even if it's only 2%, I'd think they would jump at it, especially for something which appears to be a done deal.
Note, I'm not considering this as a long...just curious.
Thanks
What is the reason that BNI is currently trading at a discount to that value? (Right around 98-ish) Is it simply because the deal hasn't gone through yet and people are holding back? Will the price slowly track up to $100 as we get closer to the actual date?
If the big money could buy something at a discount, even if it's only 2%, I'd think they would jump at it, especially for something which appears to be a done deal.
Note, I'm not considering this as a long...just curious.
Thanks
Didn't get a chance to edit last post before the 30 minute time limit...
What I meant to add was that since the shares will be purchased at $100 and are currently at $98 appears to mean there is the good possibility of a free lunch.
Since there are no free lunches, I was just wondering what I'm missing here.
Thanks,
What I meant to add was that since the shares will be purchased at $100 and are currently at $98 appears to mean there is the good possibility of a free lunch.
Since there are no free lunches, I was just wondering what I'm missing here.
Thanks,
1) Time = money. How long will it take to close? Is there a better use of my money?
2) Risk of the deal busting.
In this deal, there's also the (very small) possibility that the amount will be less than or greater than $100, depending on what Berkshire stock trades at near the time of closing. There's what is called a 'collar'.
As you can see, since BNI is trading above $98, there is VERY strong confidence in the deal going through, and to close in a timely manner (estimated to close sometime in Q1 2010).
Read the documents. You are very inexperienced and you have an opportunity to learn with this deal. Also, check out other deals to see the various factors/risks and their corresponding discounts.
And some friendly advice: don't risk any more of your money when you have such a poor grasp of the basics.