who thinks the BIDU p&d was not planned.

[da-net]

Just one simple question for those that were handed your hat in BIDU...What are you going to do about it?

 

[mhashe]

Quote from gharghur2:

Hi
I'm going to speculate as to what could have happened. You guys can correct me. Okay?

First to answer your ADS question: Baidu.com, Inc. announced its initial public offering of 4,040,402 American depositary shares, or ADSs. Each ADS represents one Class A ordinary share. The ADSs are evidenced by American depository receipts, or ADRs. The ADSs began trading today at $27 per ADS on the NASDAQ National Market under the symbol "BIDU."

Now nobody can short the stock because there is none to be borrowed right? However, if you could purchase the stock (post offering) @ $27 a share, you can short your own stock: it's called short against the box.

In other words, you own 400,000 share @ $27 by exercising the option. The stock is then run up to $122 and you short it, effectively selling at $122 without giving up the stock. So you raked in a $95 profit on each share, and your totally hedged. When stock does come available for shorting purposes, and the stock dives, you cover your short.

Makes sense?

gharghur2, my question was how does one effectively devise a *long only* strategy and make "a lot of $" as posted prior.

Yes, obviously the most logical and market savvy trade would be to realize the new deluge of shares coming into the market and wait for the opportune time to short alongside the owners of the newly minted said stock.

Again, how do we make $ devising a *long only* strategy using the aforementioned knowledge. If options is involved, then why the need to buy the underlying? I think it would be a neat piece of knowledge to have , unless ofcourse like most other ET posts, the poster is full of ........


As posted:

"I exploited that information and made some really nice dough on the long side - one of my best swing trades of the year on size"

by:


EtfTraderLives

Registered: Jul 2004
Posts: 424

09-14-05 09:27 PM

Read the IPO prospectus. If you had, you would have known that Goldman, Piper Jaffrey, and CSFB had 30 days from the initial public offering to purchase 481,304 ADS's at the initial offering price of $27.

Thirty days forward was last Thursday when the stock bottomed out at $77/share. I exploited that information and made some really nice dough on the long side - one of my best swing trades of the year on size.

Sometimes, you have to do your due diligence to make a killing!

 

[EtfTraderLives]

Quote from mhashe:

Again, how do we make $ devising a *long only* strategy using the aforementioned knowledge. If options is involved, then why the need to buy the underlying? I think it would be a neat piece of knowledge to have , unless ofcourse like most other ET posts, the poster is full of ........

You know mhashe, in one sweeping comment you managed to insult myself and the very insight you are pleading others to help you with ("how do we").

BIDU going from $77 to $120 in a matter of days isn't uncommon in the trading world. A 55% move isn't anything to disbelieve, is it?

You know, there are people out there that actually do their due diligence and use their minds to trade. (Oh my God! Don't say so! You mean you just don't press buttons and watch lights go on and off?)

Why discredit someone who was successful and who was generous to offer unique information on how he planned and executed a successful trade?

Ask yourself how many successful traders on this website are going to go out of their way to offer that kind of information for you to learn by?

Makes no sense to me.

 

[da-net]

Quote from EtfTraderLives:

Ask yourself how many successful traders on this website are going to go out of their way to offer that kind of information for you to learn by?

Makes no sense to me.

Only the ones that care!

 

[mhashe]

Quote from EtfTraderLives:

Quote from mhashe:

Again, how do we make $ devising a *long only* strategy using the aforementioned knowledge. If options is involved, then why the need to buy the underlying? I think it would be a neat piece of knowledge to have , unless ofcourse like most other ET posts, the poster is full of ........

You know mhashe, in one sweeping comment you managed to insult myself and the very insight you are pleading others to help you with ("how do we").

BIDU going from $77 to $120 in a matter of days isn't uncommon in the trading world. A 55% move isn't anything to disbelieve, is it?

You know, there are people out there that actually do their due diligence and use their minds to trade. (Oh my God! Don't say so! You mean you just don't press buttons and watch lights go on and off?)

Why discredit someone who was successful and who was generous to offer unique information on how he planned and executed a successful trade?

Ask yourself how many successful traders on this website are going to go out of their way to offer that kind of information for you to learn by?

Makes no sense to me.

I apologize if you took my question as a personal insult. I did not mean to insult your intelligence or your trading. I was merely trying to understand the logic or trade structure of being "long with size" when it was apparent that the float was being added to. Logically with that information I would have been looking to "short with size" or buy PUT LEAPS if available on the days after the IBs exercised their warrents (?). As I stated in my initial post I don't trade IPOs ( or stocks for that matter), I was only assuming there must be some logic behind going "long with size" knowing that the number of outstanding shares was about to increase. Again, I apologize if the question was taken as an insult. It was never meant that way. Seeing that the question did not elicit much response as to the structure of the trade setup, I'll take it as a missed opportunity to learn something new.

 

[EtfTraderLives]

Quote from mhashe:

I apologize if you took my question as a personal insult. I did not mean to insult your intelligence or your trading. I was merely trying to understand the logic or trade structure of being "long with size" when it was apparent that the float was being added to. Logically with that information I would have been looking to "short with size" or buy PUT LEAPS if available on the days after the IBs exercised their warrents (?). As I stated in my initial post I don't trade IPOs ( or stocks for that matter), I was only assuming there must be some logic behind going "long with size" knowing that the number of outstanding shares was about to increase. Again, I apologize if the question was taken as an insult. It was never meant that way. Seeing that the question did not elicit much response as to the structure of the trade setup, I'll take it as a missed opportunity to learn something new.

Ever consider that the float is small and susceptive to quick momentum movement? Adding another 800K when the stock trades 5,000,000 on average a day is NOTHING. Again, CSFB, GSCO, and PIPR GOT 800K+ shares from the company at $27/share as part of their underwriting fees.

Ever consider that the underwriters (GSCO/PIPR/FBCO) happen to also be market makers in the stock?

http://www.nasdaqtrader.com/asp/dai...earchby=issue&Symbol=BIDU&View.x=34&View.y=20

C'mon. Put two and two together to figure it out.

 

[bali_survivor]

Quote from EqtTrdr:

no joke...


just amazing how this can happen and nobody smells anything fishy to investigate...sheesh

Profitable trading is based on the premise that people will keep on making the same mistakes as they have in the past.

In other words: "This time it will be different". (no P&D of an IPO) Yeah right!

 

[chud]

Quote from EtfTraderLives:


C'mon. Put two and two together to figure it out.

explain it for us morons.

 

[james_bond_3rd]

Quote from chud:

explain it for us morons.

It is common knowledge in the stock world that a stock will run up after warrant expiration, or after a secondary is priced. I guess here it is a similar situation.

Call it manipulation if you like but it happens a lot.

 

[SteveD]

As I understand it, the IBankers had UP TO 30 days to exercise.

Is there information available exactly when they did the purchase? How do you know they didn't purchase a week after the IPO and get out at $120?

How do you know if they own any more stock than necessary to make a market?

My natural inclination would have been to go "short"

I am just trying to learn a new wrinkle to make money when possible.

SteveD