Good short (Rubicon Technology) RBCN

K

kxvid

What do you guys this about this junker of a stock. I doubt this company will ever be profitable. Great short in my opinion. Its getting run over by the majors and its business model just dosen't work.
 
The chart is downtrending and appears to be shortable when the next rally stalls (which looks to be soon based on the trend), but I'd be careful because they report earnings on 7/30 and anything can happen.
 
I short a lot of stocks, but after several sleepless weekends and close calls I dropped position size way down. If the short trade gets to be a significant pcnt of your account, one day one of those surprise "buyout-at-a-72%-prem-to-closing-price" deals will gut you. Or even the rumor of one. Probably won't be a concern with RBCN and you might never get hit. But it just takes once.

I run position size much larger with ETFs. They can move pretty good, but all they will do is maybe give you a bloody nose.

Speaking of ETFs, I have been in and out of UNG for a couple weeks. Mostly long and it's been kicking my ass. Everybody, start using more nat gas...PLEASE.
 
Quote from Wayne Gibbous:

I short a lot of stocks, but after several sleepless weekends and close calls I dropped position size way down. If the short trade gets to be a significant pcnt of your account, one day one of those surprise "buyout-at-a-72%-prem-to-closing-price" deals will gut you. Or even the rumor of one. Probably won't be a concern with RBCN and you might never get hit. But it just takes once.

I run position size much larger with ETFs. They can move pretty good, but all they will do is maybe give you a bloody nose.

Speaking of ETFs, I have been in and out of UNG for a couple weeks. Mostly long and it's been kicking my ass. Everybody, start using more nat gas...PLEASE.
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Wayne, I am simply scared to hold shorts overnight for that reason. More commonly a stock drops and becomes "oversold" causing and ANALyst to upgrade the stock from a neutral to strong buy. Not worth the heartache IMHO.
 
It would be a better option to buy puts if youre worried about the above scenario. Atleast you cant go into debt doing that.

Generally I like to short stocks long term so lots of idiots buying on an analyst upgrade isn't so much of a concern. Buyouts are the worst case scenario. Not too many happening in this markets, though.

The reason I like Rubicon is that the odds are all stacked against them. Their core business is weak and the margins hugely inverted. Insiders are selling like mad. Analysts expect $0.11 eps on July 30th but they will probably post another big loss. Their technology is also obsolete (see article). Due diligence is required of course!

http://news.uns.purdue.edu/x/2008b/080717SandsLighting.html
 
I find shorting in general very satisfying, but much tougher than long trades. Not just picking the right stock, but the psych aspects of holding them when you are getting pounded and the whole damn market is ramping.

For example, what a great long term short CROX would have been. Sure, most of us knew they were trading way too high: Cheap plastic fad shoes in a low margin, low barrier to entry world, where cheap knockoffs abound. And fairly dependent on the soaring price of petro chems.

Most people would and did get short too early. Any prudent stops would have been hit. Took some conviction to hold those shorts and/or re-enter. Conviction I don't have...

I'll stick with 1-4 day short trades. Just looking for a nibble. Good trading to all!
 
Quote from kxvid:

It would be a better option to buy puts if youre worried about the above scenario. Atleast you cant go into debt doing that.

Generally I like to short stocks long term so lots of idiots buying on an analyst upgrade isn't so much of a concern. Buyouts are the worst case scenario. Not too many happening in this markets, though.

The reason I like Rubicon is that the odds are all stacked against them. Their core business is weak and the margins hugely inverted. Insiders are selling like mad. Analysts expect $0.11 eps on July 30th but they will probably post another big loss. Their technology is also obsolete (see article). Due diligence is required of course!

http://news.uns.purdue.edu/x/2008b/080717SandsLighting.html
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That's exactly what I do for overnight shorting, buy puts. Regarding the "insiders selling like mad" input: I've seen that 3 times before earnings in the past 2 months and the stocks tank unbelievably on the earnings miss (check out the gap downs on LNN, ANAD and CPHD, all had multiple insiders selling in the weeks just before earnings).
 
Quote from zdreg:

which strike price do you prefer for overnight shorting?
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I looked at the options the other day and they are too illiquid for me, so I don't have a strong opinion on RBCN in particular. However, when I buy puts (rather than straddle) to short on a high probability earnings play, I generally choose slightly out of the money because the premium is cheaper than ITM and less is on the line if I'm wrong. I wouldn't go too far OTM, though.
 
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