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Posted November 01, 2009 (07:24PM)
After struggling for months to avert bankruptcy, lender CIT Group has
filed for Chapter 11 protection earlier today. If you were short the shares or long puts - congratulations. If you sold expensive puts (like me), CC, etc long - there will be pain tomorrow.
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Posted November 01, 2009 (07:38PM)
Another of the residue of the abortion once a part of Tyco. This pain was a long time in the making.
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Posted November 01, 2009 (07:38PM)
Of all the headlines om this topic, this one got my attention:
"CIT Files Bankruptcy; U.S. Unlikely to Recoup Money " After their executives recently rejected TARP money (to avoid personal pay restriction), it would appear the taxpayer is on the hook anyway. Maybe Dylan Ratigan's thoughts on Jefferson's insight referring to banks rendering us to indenturement to gambling casino's wasn't so far off after all. |
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Posted November 01, 2009 (08:04PM)
OF, I'm not an expert at this but I believe if you short the stock in the premarket you can change your position to a short call and maybe save yourself at least some of the pain.
The following excerpt is from the Sheridan Options Mentoring Blog that might be helpful. Reverse Market Directional Bias quickly Suppose you are bullish on the market and have a Long Call. You change your mind and decide you should be bearish. If you sold your long call and bought long puts, you would have two commissions and two sets of slippage to deal with. Since we know a Long Put = Long Call + Short Stock, all we have to do is SHORT THE STOCK. This changes your position to a synthetic Long Put with one transaction. This technique is also VERY useful in very fast market conditions. Option bid/ask spreads can really widen during fast markets so your fills closing your Long Call and buying your Long Put might really put you in a hole starting out. Since stocks are very liquid and have very tight bid/ask spreads normally, shorting the stock is a very useful tool to convert your Long Call position during a fast market. I hope this helps... Jim |
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Posted November 01, 2009 (08:07PM)
This is a real kick in the shin to we the taxpayer -
"..... But here's an interesting thing. When CIT goes down, Goldman Sachs reportedly will receive a billion dollars from CIT under a 2008 rescue agreement between the two firms. Now, why will Goldman get a billion, while taxpayers lose more than twice that?" I find myself wondering if this agreement between GS and CIT hadn't been reached with the knowledge of a probable bankruptcy was likely in the cards in the first place....since when does a private creditor get first dibs over the US taxpayer? Looks like Goldman Sachs is winning at the black-jack table yet again....boy those guys are good, now make your checks payable to the united states treasury, c/o Goldman Sachs. |
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Posted November 01, 2009 (08:18PM)
Golax, with it being known that CIT is (going) in bankruptcy, there will be no stock available to short for OF, if there was the big boys would take it to short. No, it's a case of closing the barn door after the horse is out for OF. It may be worth it for OF to cover at the market, if he thinks that he will get a price better that the put exercise value. If not, he could wait and hope for 'the dead cat bounce'.
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Posted November 01, 2009 (08:21PM)
I find it funny OWL that this would be a surprised, they got 10 billion on AIG crash.
They know when to bet on & make it happen. Best Closer |
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Posted November 01, 2009 (09:47PM)
Guys, thank you for the nice words and the concern but sp is right - the hourse is out and the door is closed. These synthetic relationships work the best if the legs are executed at the same time. Even if I find some shares to short tomorrow pre-market, they will be pennies
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Posted November 01, 2009 (10:08PM)
Didn't someone say months ago to be carefull betting "WITH" CIT? This news of BK was delayed but expected..... When I heard GS was getting paid for these guys going under I figured it was a given, lol, GS don't bet "WITH" looser to often..... Good LUck!!
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Posted November 02, 2009 (09:31AM)
Bankruptcy is the one word that will cause me to sell my shares immediately. I sold my CIT shares months ago at a fairly substantial loss when the stock dropped below $1 and there were rumors of bankruptcy at the time. I have been tempted to jump back in occasionally, but have been able to fight off the desire. I just kept telling myself, if you came across this stock today, with its current financials & knowing that bankruptcy was a possibility (and maybe a probability) sometime in the future would you buy? My answer was always a resounding NO. |
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Posted November 02, 2009 (09:40AM)
Good rule TJ
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Posted November 02, 2009 (10:50AM)
OK, CIT trading resumed and I am out. Maybe everybody is holding for the "dead-cat" bounce sp mentioned above. I did loose some money on it but I knew the risks and I decided to take it. Let's move on ....
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Posted November 02, 2009 (11:01AM)
Well, CIT is down to 0.26 as of this writing. One thing I don't understand: Why isn't it down to 0?
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Posted November 02, 2009 (11:11AM)
The institutional shareholders believe they will receive something during the BK process, 0.26 in this case
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Posted November 02, 2009 (12:01PM)
Speculators also. I have a friend who bought one bankrupt bank last year when they were trading for .25 or so and then sold at like .35.... he made a few grand but its risky as hell.
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Posted November 02, 2009 (02:26PM)
Remember when GM had already announced bankruptcy and it was at $1? I bought it there and sold at $1.60, I called it a pity purchase, never expected to make anything so I only bought a puny amount...oddly enough I made a few bucks, go figure. After that I adopted Jakes rule - NO bankruptcies! For right now, with the impending volume of defaults with the massive size of unemployment, bankruptcy comes to mind with almost any financial, barring a select few that don't exactly fit the bill for the average day trader. |
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Posted November 02, 2009 (04:50PM)
Remember the logic students that got struck at the third week lecture on 'Modus Ponens', and they come right before the final hoping for a one hour 'refresher' that will give them a "D". It's because hope springs eternal. That is, until the lid shuts. Okay CIT, CLANG! |
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Posted November 02, 2009 (05:15PM)
I still own warrants that they gave me for my worthless stock in the Owens Cornimg bankruptcy. Pennies on the dollar. Maybe I should wallpaper the closet with them.
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Posted November 03, 2009 (12:12AM)
With CIT crashing, who will benefit?
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Posted November 03, 2009 (12:45AM)
El Dorado,
Bondholders and Goldman Sachs (through CDS's) get the mine. Current common shareholders get the shaft. |
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