The Shorting of Frauds, Overhyped and Bankrupt Stocks Journal

When there are no shares to short always check if the stock has SSFs. Usually you will have to pay up to short it but it becomes possible(The discount will be paid anyway by shorting shares in the form of short fees)

SVU has SSFs. 13cent discount to the stock to short it. But I'm don't have a high confidence view there
 
Quote from m22au:

It may not be over $5, (then again NOK is sub $2 but still a big company), but SVU is today's standout, down 47%.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3570882#post3570882
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It's absurd they kept paying a dividend for so long. Clear red flags were: it's a shitty business with no 'moat', in a very competitive industry; it had a lot of debt; stupid capital allocation (paying a dividend when business was declining, instead of retaining capital to ensure solvency); and the stock has been trading like shit for over a year.

That could be quite a nice template for future short picks.
 
Quote from Daal:

I never did much options trading other on outright directionals but its quite possible that it can help my trading. Its about self-improvement
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Ok I understand that. My personal experience is that if you can predict direction and timing in a given situation, you make such a killing on the leverage of long options that considerations of volatility and spreads are totally swamped. The amount a 'correct' long options punt goes up when you are right is so big that it is just incomparable to any short gamma play or even a good spread. If you know the market is probably going to bounce 10% in the next week, just by the OTM front-month call. If you know a stock is likely to fall 90%+ in the next 2 years, buy the most distant month OTM put at a low strike. Yes you make less and lose more when wrong if IV is high, but you still do a lot better in return to risk than you do by being in the outright or short an option.

Where I did badly or underperformed the potential was when I tried to do fancy shit like spreads, vol plays, and all that stuff. My advice is leave that to option pros, and concentrate on the pure speculation. Get the timing and direction right as much as you are able, then don't be afraid to just take a pure directional punt. Yes your hit rate will be low, but when you make 10, 20, even 40 times your money (which I have on some occasional mean reversion plays in the past - obviously most are less) on winners, and are only punting 1% or less, then who cares about only scoring on 25% of your plays.
 
I shorted a bit after the news hit tradethenews(usually faster than most retail news sources). They are under SEC investigation and muddy rushed the report to get the SEC to be aware of those facts. Seems like a stock that will be delisted soon
 
EDU down huge, plenty of shares to short at IB. Options trading also was avaliable. These stocks where the uptick rule come into effect(usually after a huge down day) tend to be more gradually adjusting instead of tanking a lot very fast, so there was plenty of time to short this one. I'm holding my shorts till the SEC brings down enforcement actions or the auditor resigns
 
I'm finding that stocks with the uptick rule tend to be quite easy and stable to short. Today there was ROVI, last week LXK. Both had bad news, large declines and a steady downtrend through the day(Short sellers can't clean the bid book due the restriction), the decline takes longer to achieve. There were plenty of chances to short rallies and cover on declines and I was fortune enough to do that but you have to be patient and believe in what are you doing, also ignore the mini squeezes. I wonder if other people has the same experience with the uptick rule
 
Quote from Daal:

I'm finding that stocks with the uptick rule tend to be quite easy and stable to short. Today there was ROVI, last week LXK. Both had bad news, large declines and a steady downtrend through the day(Short sellers can't clean the bid book due the restriction), the decline takes longer to achieve. There were plenty of chances to short rallies and cover on declines and I was fortune enough to do that but you have to be patient and believe in what are you doing, also ignore the mini squeezes. I wonder if other people has the same experience with the uptick rule
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So the uptick rule is good for shorting?? Because short squeeze rallies aren't that big due to there not being a big plunge but a steady sell-off?
 
Quote from jj90:

Daal, would be interested in your garbage index if you constructed one.
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UAPC XCLL GWBU SEFE AAMRQ PVTA LUXR. The weights are not equal because I started shorting really small positions to get comfortable with this strategy, the shorts I'm adding now are bigger
My goal is to devote something like 5% of my networth to the garbage index with the goal of making something like 60-80%(50% after short fees perhaps) a year in that portion. Margin requirements are bigger than normal stocks. 5% might require something like 20% margin or more, so that is something to take into consideration

That nice thing is that it helps to deal with squeezes. GWBU soared today, it still not a big deal, its just 1 input in the index
 
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