Wednesday, April 15, 2009

Violent Portfolio: Using Violent Tools for Investing

So I've decided to put my investing acumen to the test by creating the "Violent Portfolio." The Violent Portfolio will track investing performance of my ideas on this blog using a hypothetical $100,000. It will use leverage, shorting strategies, options, and more if you're lucky!

In time I will try to make the Violent Portfolio track my own personal portfolio, but for now lets take things one step at a time...

Example Portfolio
$100,000 in assets




















































symbol
price units costs total











Buy FMCN
7 1000 5 -7005











Sell Short SINA
27.5 -365 5 10032.5











Puts FUOVA
1 10 1 -999






























Net cash outlay =
2028.5 (positive means you shorted more than you bought)






















When you receive SINA shares:

































1) Since you already sold SINA short, your SINA position will be 0 and you will have about $10k in cash
2) You're left with FMCN shares, but they will be cut in value likely since they sold most of their ops
3) If FMCN still trades above $5, I would immediately sell those shares!










4) Your put options protect your FMCN shares at $5, or a net value of $4










5) In October you close out your put options and FMCN shares if put options are in the money

Reminder: I own FMCN, short SINA, and have put options orders placed on FMCN as above for $1

2 comments:

  1. The FMCN put options will apply to both the new SINA shares AND the stub FMCN shares, so a put will not really protect you at all. Also, FMCN does not appear to be moving in tango with SINA. Perhaps there is something you are missing.

    Disclosure: VERY long FMCN :)

    ReplyDelete
  2. where did you hear that from? my broker has not received any info on any rulings about what will happen with options from the regulators.. but this was about a month ago now.

    spreads have tightened however-

    ReplyDelete