Stripper Spread Trade VCGH Vs. RICK

Quote from jaytrader100:

looks like ricks cup size is getting a reduction..the spread trade is off to a fantastic start!!!!!!!\


sell rick's 22.77
buy vcgh 4.65

spread=18.12 initial

now spread is 17.05= $1.07 gain
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Good work Jay!!

I have been thinking of an outright buy of VCGH for about a month now. Perhaps a pair trade is a better than outright straight trade.

Best of luck to you and I will keep following your progress

Bob
 
Spread continues to work!

rick 21.41
vcgh 4.64


spread start price: 18.12


spread now: 16.77


profit= 1.35 per share

if spread narrows to 4.00 profit per share ..offset half
 
Quote from jaytrader100:

Here is a chart showing the interaction of the two stocks over the past couple of years.

VCGH is red line

RICK is black line..sell the high one and buy the low one!!

it is the reverse from one year ago!!!!!!!

a year ago you would have sold VCGH and bought RICK!!!!

Look at that chart.. at 22 bucks both are over valued.. at 5 bucks both are undervalued... so now .. you sell over valued (rick) and buy VCGH ( undervalued) .. just don't forget to support your single mom at the strip club one dollar at a time with your profits... I love this trade
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This is probably a noob's question, but how does your chart compare the price of VCGH to RICK @ $22 when VCGH never has reached above the price level of $16?
 
Quote from jaytrader100:

VCGH and RICK are two companies who own and operate strip clubs. my Trade for the next 4 months is a spread... beginners may want to try this spread in a 100 qty share increment. Here is my trade?:

I think this is a double AA rated trade with Double D's supporting the bottom line!



RICK sell 2000 @ 22.77 (or higher)

VCGH Buy 2000 @ 4.60 (or lower or higher up to 5.00)

Obviously, I think RICK is over valued and VCGH is undervalued

Hold for 3-4 months or until spread yields 7.20 to 8.00 profit.

At 4.00 profit yield i would offset 1,000 shares each.

Link to thread that brought my attention to the over valued ricks.(imho) THANK YOU

http://www.elitetrader.com/vb/showthread.php?s=&postid=1937267#post1937267
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Why would you pick 2000 shares of each? If you wanted to really trade the spread, you should be much closer to dollar delta neutral. As it is, you're selling $45k notional of one, buy $9.2K notional of the other. You're straight up short 36k stripper dollar deltas.
 
I picked up 2000 shares of each because that is what I wanted to do.. I nevr mentioned being delta neutral etc.. so to make you happy.. okay a RATIO spread then.. Geeez.. why not look at the trade not the mechanics.. you can trade spreads however you want.


i HAVE SEEN A STRIPPER WITH ONE "LEG" SHORTER THAN THE OTHER.. MAYBE IT DIDN'T OCCUR TO YOU THAT I THINK SHORTING rick HAS A HIGHER PROBABILITY OF SUCCESS THAN BUYING VCGH.

At this point I ahve actually done better on an ROI basis by shorting more dollars of rick.. I would have lees profit at this point if I had been delta dollar neutral as you call it.
 
Quote from jaytrader100:

I picked up 2000 shares of each because that is what I wanted to do.. I nevr mentioned being delta neutral etc.. so to make you happy.. okay a RATIO spread then.. Geeez.. why not look at the trade not the mechanics.. you can trade spreads however you want.


i HAVE SEEN A STRIPPER WITH ONE "LEG" SHORTER THAN THE OTHER.. MAYBE IT DIDN'T OCCUR TO YOU THAT I THINK SHORTING rick HAS A HIGHER PROBABILITY OF SUCCESS THAN BUYING VCGH.

At this point I ahve actually done better on an ROI basis by shorting more dollars of rick.. I would have lees profit at this point if I had been delta dollar neutral as you call it.
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make sure you never trade a buyout arb with that kind of thinking
 
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