Thursday, February 15, 2007


The lower outlook seemed to be enough for traders today to take profits and take a hike. The stock was down over $13 earlier today but closed down just under $9 to 106.18.

Wednesday, February 14, 2007

No Bye Bye Yet On BIDU?

Will this after market reaction turnaround at tomorrow's trading? So far BIDU up over $4.00 at 117.20ish.

In a Reuters report the company tempered revenue growth for the next quarter saying it was likely to decelerate sharply. Even so investors are excited for now it seems about the 4oo percent increase in 4th quarter net profits.

Maybe no bye bye yet....

Monday, February 12, 2007

NFI or NEW? You Choose

I have been tracking the subprime lenders too long now. By that I mean I should have been putting/shorting these troubled companies a long time ago. Oh well, such is life as the saying goes always a day late and a dollar short.

Well maybe not this time. As of 2/9/07, Morningstar just posted a fair value valuation on NFI and NEW of "BANKRUPTCY". Yes that's not a typo.

Here's two reports to chew on that probably will be a negative going forward for these two bad boys. NFI Judge certifies class in suit against NovaStar (Fri, Feb 9)

And, Subprime Lenders Face Challenging Market at (Fri, Feb 9)

So what will I do about it. Unfortunately, the bad news is being baked in to the stock price but I think there's more bite than bark to the downside. I'll wait for a rally of sorts if any and then look for an entry in either one. Even with extremely high IV, there is now lack of sharkbait.

I might take a bite at the NEW Mar 12.50 Puts currently trading around $0.65 with over double the option volume to open interest or the Mar 10 Puts with over 6 times OV to OI (already released earnings 2/8/07). Or the NFI Mar 12.50 Puts at 1.10 or Mar 10 Puts at .50 (next earnings 3/5/07).

Remember this is a deeply speculative play because any hint of good news could propel this stock higher.

Stay tuned...

Bye Bye BIDU?

Is it time for BIDU to be the next sell on the news victim? Apparently, Cramer expects profit takers to emerge after the company reports earnings this Wednesday and since he's the mighty "oracle" we should all listen, right? Well actually in this case yes.

This is setting up to be a potential call credit spread play with the FEB 115/120 Call net credit trading around 2.20. Not the best r/r but should see some nice premium degradation from the IV decline that probably will result and maybe some underlying help.

Current IV levels on these calls are 90% which is above 52 wk highs (see IV chart below).

We'll see what happens....