Alerts & Commentary
Happy New Year – January 2010
Well………………….
I am happy to finally be able to report…
The Trade Coach is back at work full-time for the first time since October. For those of you who use our Private Trade Execution Services, you all know that Coach BD has been busy taking good care of all of your portfolios and we can report that RMBS, SNDK, AAPL, ESRX & The VIX were all MONSTER trades for 2009, with SNDK, AAPL & ESRX needing close to no adjustments or action for most of the year.
That was simply because these trades were carried over from 2008 and all were either already profitable or close to zero carry trades, through very effective hedging in 2008. This gave us the luxury of simply holding them through this past year, risk free. The ultimate, and perfect trade scenario.
For some of you who got in early w/us on TSRA, that was another very good result, though if you waited for either of the add-ons to open your initial position, you are probably near breakeven (BE) or even down 10 – 20% on that trade… BUT fear not, for those of you who are holding TSRA we will be trading this position for Income over the next few months waiting for the HUGE potential move in RMBS to drag TSRA along.
Finally, we made very big returns on the VIX early in the year and then SOLD ATM premium against our Long OCT Calls through JULY, when we exited, leaving us with another year of very big gains using the VIX, though unlike 2008, when high volatility reigned, 2009 was a hedge against our hedge trade as we sold 5 straight months of ATM Premium, collected it ALL, and then sold our core OCT Calls for just $1.00 under our Cost Basis @ JULY Expiration.
So, where does that leave us…
We will be exiting AAPL & ESRX @ JAN Expiration. We SOLD ATM & near OTM Premium against these for JAN because we thought these runs may be coming to an end, and we wanted to hold these into this year so we won’t have any tax reporting, or tax paying, until next year (2011)… SWEET…!!! SNDK will fall into that same boat though we intend to roll out our JAN Expiring Calls that we have held since 2008, and we will be trading those out for JAN 2012′s.
For those who remember our past discussions, SNDK has been one of our favorite LT Trades almost every year because of the huge runs this stock routinely makes in both directions. We feel that this upside run in SNDK may continue through this whole year as SNDK has reestablished itself as the Gorilla in its market. Since JAN 2006, SNDK has been making a nice LT cup formation from its highs near $80, and now that we have a new, strong uptrend building the right side of the LT Cup, $80 may be in play once again over the next year or two (thru 2011).
We’ll address our outlook for RMBS and TSRA in a separate post because there is just so much to talk about with RMBS… (so what else is new)… BOTTOM LINE… Hang onto RMBS, and TSRA, for now cuz the storm is comin. This strong move we’ve made from the NOV 2008 lows near $5 to where we are now, near $23.50 will seem like a blip on the chart if Samsung rolls over and settles with RMBS prior to the AT Trial scheduled to start next week. If that happens, or if anyone else jumps in to settle ahead of Samsung, we could easily see $60, perhaps even $80 – $100 before the year is out.
YEEEEEEEEEEEHAAAAAAAAAAAAA…………….!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
It really could be the MONSTER GORILLA trade of the decade, if not the Century, should the dominos start to fall. Once they start falling there’s no telling how high RMBS may go. We believe that RMBS is perhaps a $10 – $25 BILLION dollar company in market cap, especially if settlements and licenses start rolling in this year, as we expect they will… so that’s anywhere from 5 – 10x its current price. YIKES…!!! The estimates are truly mind-boggling. We’ll be happy with $60, but $80 – $125 is certainly in the ballpark, just for this year…!!!
BUT, then again… its still RMBS… So anything can, AND WILL, happen. We’ll talk more about the outlook tomorrow along with our strategy.
Everyone have a great evening. It is so very good to be writing once again.
Coach BD
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