Yep... I missed out when my options on WaMu and a few builders expired before they fell but I bought an "out of the money" put on CFC at $36 last spring - right after their tanning-bed skinned CEO started talking about how they'd gain from the pending troubles. I figured the guy was a weasel and (essentially) shorted his stock.
Sad, though, how many employees are losing their jobs...
Submitted by temeculaguy on January 8, 2008 - 7:35am.
KB is going to get the snot beat out of it today as well, thier quarterly losses were just announced and they were huge. I never thought CFC would go under, I actually thought that some of the lenders and builders would benefit from the shakeout, after some went out of business the survivors would gain market share. While I always knew it would get bad, I'm suprised how bad and how fast. I would bottom fish some of these stocks since some are 90% off but I know too much about the market now to touch them.
Missed the KB fall too - bought too short of an expiration.
Rumor is that CFC employees can sell what they've got ONLY in Jan and that many / most are going to take what they can get and leave the sinking ship. No idea if that's true or not, but that's why I'm holding the put until it expires later this month.
Today's low is now $6.26. I'm mad at myself for covering my short position at $10.22, weeks ago. I was worried about more rate cuts. If there is another rate-cut rally, I'll get in and short again.
Submitted by seattle-relo on January 8, 2008 - 10:19am.
So if CFC goes bankrupt, what does that mean for those who have their mortgages with them and those are in the process of getting a loan with CFC? Are they even originating new loans?
Submitted by The OC Scam on January 8, 2008 - 10:36am.
Friend of mine just lost a loan from CFC they decided after being escrow for 22 days to require full 20% from the approved 15% with 5% reserves or deal off. He decided deal off and is trying another lender...I think CFC knows they are nose diving!
Submitted by drunkle on January 8, 2008 - 11:01am.
today was nice... $5 jan cfc put popped (cfc dipped under 6 already), $3 etfc popped (30% loss in a day!), 7.5 may dhi popped, $5 jan hov popped, 15 jan len popped... all in the 2-3x range, cut the positions in half, let em ride...
still need $25 jan c to work, 7.5 jan dhi, $20 mar c. wrote off $30 jan bac, 12.5 jan cfc call, 20 jan c, 10 jan len.
hopefully, citi's report on the 15th will be nice and ugly.
Submitted by 5yearwaiter on January 8, 2008 - 11:27am.
I moved out all my CDs worth of 100k from country wide bank. If any one see bankrate.com this bank offering high yield Money Market as well CD and next one in the line is etrade. However bankrate provided no STAR * in the ratings for Countrywide which means underperform or no comment on this bank. Still etrade shows two Starts ** . I am kind of sure one day CFC and related Coutrywide slowly our FED merge them into one either along with B O A or Etrade or all together - bumpy ride.
BTW I chose Zions Banks as one to keep my funds, is this good one? Any thoughts about Zions Bank(showing ****)?
Submitted by drunkle on January 8, 2008 - 12:56pm.
after posting up my plays, the market moved up. cfc denied the bankruptcy "rumor" and my plays all edged down. typical, as soon as i shoot my mouth off, the market punishes me. so, in retribution, i bought 130 jan dia call when dow was +10ish. in response, the market slides off 60 points and my puts are back in motion.
how cool is that?
edit:
anyone notice that wall street is now a bookie? you can place bets on presidential candidates!
after posting up my plays, the market moved up. cfc denied the bankruptcy "rumor" and my plays all edged down. typical, as soon as i shoot my mouth off, the market punishes me. so, in retribution, i bought 130 jan dia call when dow was +10ish. in response, the market slides off 60 points and my puts are back in motion.
how cool is that?
edit:
anyone notice that wall street is now a bookie? you can place bets on presidential candidates!
Great Drunkle. Now that you own both long and short position, this basically means the market isn't going to be moving one way or the other until you exit one side. Thanks for nothing, and screwing the rest of us in the process :)
Still waiting for stockstradr to post since it's a down day today. Was missing him yesterday, because it was an up day yesterday :)
when i figure out how to "rent stocks", then i'll have up, down and immobile positions! what will happen then... a singularity opens up and swallows the market whole?
it's gratifying to know, however, that the market moves (opposite) to whatever i do. fear me! i am the bringer of 401k doom, destroyer of retirement accounts, decayer of day traders, bane of discount brokers and annoyer of real stock investors!
btw, my scottrade guy corrected me when i called my put options "shorts". he called them long puts. i'm still confused as to what exactly entails "long" or "short".
btw, my scottrade guy corrected me when i called my put options "shorts". he called them long puts. i'm still confused as to what exactly entails "long" or "short".
Options work different than stocks.. though they tie to the price of the share. Options are holding a 'bet' on a future event. All option purchases are effectively 'long'.
Purchase stock: Long position because of 'purchasing' an item (share in this case). You get dividends(if any). Maximum loss can be full price of stock, maximum gains are taxed at either income rate(STCG) or 15%(LTCG) (unless lower income bracket in which case it may be 10% or 5%)
Sell stock short: Short position because you 'sold' something you do not yet have (so you are short on that position). You 'receive' money when you commit a short position because of the sale. The money has a cost (generally the margin rate on the amount of money involved), but this cost can be written of on your taxes (investment interest expenses). Maximum loss is full price of stock plus carried interest expense. Maximum gain would be like stock purchase but in the opposite direction and of course interest rate subtracted.
Buy a put: Long position on the option to sell stock at strike price at a future date. Betting on stock movement down. (you did not sell a put without having the put. The originators of the put could be said to be having the short position). Puts are a way to control large blocks of stock with a small amount of exposed capital. Maximum loss is only the purchase price of the option. Maximum gain is number of controlled shares x movement above strike price - price of option. Taxed at income rates.
Buy a call: Long position on the option to buy stock at a strike price at a future date. Betting on stock movement up (the originator of the option could be stated as having a short position on the option, but since your action is a purchase.. it is a long position). Calls are also a way to to control large blocks of stock with a small amount of exposed capital. Max loss is only the purchase price of the option. Maximum gain is number of controlled shares x movement below strike price - price of option. Taxed at income rates.
You probably know most of what I stated above.. just being thorough for the other readers out there.
Me thinks it's the ATT CEO coming out saying people aren't paying their bills that sort of triggered the end of the day sell off, or at least that's what the news is saying.
Just for fun. I called countrywide to quote me on the best available rates as of today. Person on the phone was actually pretty nice and surprisingly told me to stay put (just checking if they would try to talk me into cashing out equity, etc)
$600k jumbo, 0 points, 65% ltv with fico 780+, full doc, 7.635%
$417k conforming, 0.5 points, 46% ltv with fico 780+, full doc, 5.625%
Ouch. Wondering when and if conformings drop below 5% will happen
Just wondering how CFC is going to find customers, especially in CA. The only solution (partial) I would say is to steal good customers away from elsewhere. But how?
$600k jumbo, 0 points, 65% ltv with fico 780+, full doc, 7.635%
$417k conforming, 0.5 points, 46% ltv with fico 780+, full doc, 5.625%
Those are ridiculous LTVs, how many people have 35% down?
Me :) But forget about that.
As I was pointing out, I'm not seeing how CFC is going to find new customers or steal existing (good) customers elsewhere without offering a better rate or some incentive or some sort. CA market is going to be tough. imho. Maybe new younger people, but how much of these people are have 20% AND are in the mood to buy? Going to be interesting.
It's extremely rare to see a stock as widely followed as Countrywide fall to the degree it's stock did today on a "rumor" that wasn't ultimately substantiated to some degree. I suspect CFC is right on the brink. Generally, where there's smoke, there's some degree of fire. Look for more lines of depositors forming in front of CFC branches in coming days...
Submitted by barnaby33 on January 8, 2008 - 6:00pm.
As I was pointing out, I'm not seeing how CFC is going to find new customers or steal existing (good) customers elsewhere without offering a better rate or some incentive or some sort.
You've just asked the 64k question. Unless you come up with a good answer, their goose is cooked. I've said since last year they were headed for BK, based on that same question. Their whole business model, what made them profitable is no longer possible. So either they go back to doing conforming loans which are the grunt work end of lending, or they die. Even if they do go back to traditional types of lending, now they are competing with every other bank that does the same thing. I'd bet their costs are a lot higher, considering their costs of borrowing have soared.
Submitted by ucodegen on January 8, 2008 - 6:12pm.
@drunkle seems like the tax basis is the most important thing to note... taxing options at full income rate blows...
Yes it does... as with most taxes.. but you have extraordinary leverage with lower risk with options... if you are careful. The tax at income rate is similar to STCG(Short Term Capital Gains). Short term capital gains are for issues held less than a year, and options generally have a less than one year period. Remember that with options, you are often making a contra bet with the originators, who are often the so called experts who may be running mutual funds (They will be the ones on the short side with options).
NOTE: On options spanning more than 1 year period, I would need to check on their tax status. They may be covered by LTCG. Depends upon the amount of time the option is held.
Thanks for calling me 'professor'.. though I really consider myself a gifted amateur. I figured that working for a salary was not going to cut it these days.. so I have set out to teach myself much of what the experts don't tell you. In 1997 (amazing how you can remember things that change course of ones life) I re-ran numbers from a portfolio that I was going to set up in 1988 and never got around to. After much crying in my beer, I took action to learn... of course I had some more crying in my beer in 2000-2001, but it wasn't nearly as bad as the revelation in 1997.
All option purchases are effectively 'long'. Not true, you can write puts and calls, essentially shorting them.
Writing options are different than purchasing an option. This is why I made the distinction on purchasing an option. In the case where you are writing or originating an option, you are effectively on the short side. If you look at where I put in italics on this entry, the originators of the put/call could be said to be having the short position. See sections specifically dealing with Buy a put, Buy a call.
seems like the tax basis is the most important thing to note... taxing options at full income rate blows...
Not suggesting this in any sort of or form. But considering our beloved government is considering wasting taxpayer's money on bailouts....
Have you ever looked at the brokerage statement and figured out what transactions get reported to the IRS and what doesn't and how things get reported :), particularly paying attention to the buying/selling, writing of options, and writen options that are left to expired???? The analysis would be interesting the implications would be left an exercise to the reader....
Yep... I missed out when my options on WaMu and a few builders expired before they fell but I bought an "out of the money" put on CFC at $36 last spring - right after their tanning-bed skinned CEO started talking about how they'd gain from the pending troubles. I figured the guy was a weasel and (essentially) shorted his stock.
Sad, though, how many employees are losing their jobs...
KB is going to get the snot beat out of it today as well, thier quarterly losses were just announced and they were huge. I never thought CFC would go under, I actually thought that some of the lenders and builders would benefit from the shakeout, after some went out of business the survivors would gain market share. While I always knew it would get bad, I'm suprised how bad and how fast. I would bottom fish some of these stocks since some are 90% off but I know too much about the market now to touch them.
Missed the KB fall too - bought too short of an expiration.
Rumor is that CFC employees can sell what they've got ONLY in Jan and that many / most are going to take what they can get and leave the sinking ship. No idea if that's true or not, but that's why I'm holding the put until it expires later this month.
Today's low is now $6.26. I'm mad at myself for covering my short position at $10.22, weeks ago. I was worried about more rate cuts. If there is another rate-cut rally, I'll get in and short again.
TG: In the Army, they teach you that, if you are involved in a helicopter crash, wait until "all violent motion ceases" before doing anything.
I think the same admonition applies here, too. We're not anywhere close to being done, and it is possible there is everyone worse to come.
I've been picking up building materials for a song, though.
For some odd reason, I thought this headline read KFC at $7.60.
Maybe CFC should partner with KFC.
Buy a chicken meal, receive a CFC share free.
selfportrait
----- Sour grapes for everyone!
So if CFC goes bankrupt, what does that mean for those who have their mortgages with them and those are in the process of getting a loan with CFC? Are they even originating new loans?
Friend of mine just lost a loan from CFC they decided after being escrow for 22 days to require full 20% from the approved 15% with 5% reserves or deal off. He decided deal off and is trying another lender...I think CFC knows they are nose diving!
As of this writing, CFC is under $6. yeehaw.
today was nice... $5 jan cfc put popped (cfc dipped under 6 already), $3 etfc popped (30% loss in a day!), 7.5 may dhi popped, $5 jan hov popped, 15 jan len popped... all in the 2-3x range, cut the positions in half, let em ride...
still need $25 jan c to work, 7.5 jan dhi, $20 mar c. wrote off $30 jan bac, 12.5 jan cfc call, 20 jan c, 10 jan len.
hopefully, citi's report on the 15th will be nice and ugly.
I moved out all my CDs worth of 100k from country wide bank. If any one see bankrate.com this bank offering high yield Money Market as well CD and next one in the line is etrade. However bankrate provided no STAR * in the ratings for Countrywide which means underperform or no comment on this bank. Still etrade shows two Starts ** . I am kind of sure one day CFC and related Coutrywide slowly our FED merge them into one either along with B O A or Etrade or all together - bumpy ride.
BTW I chose Zions Banks as one to keep my funds, is this good one? Any thoughts about Zions Bank(showing ****)?
5yearswaiter
after posting up my plays, the market moved up. cfc denied the bankruptcy "rumor" and my plays all edged down. typical, as soon as i shoot my mouth off, the market punishes me. so, in retribution, i bought 130 jan dia call when dow was +10ish. in response, the market slides off 60 points and my puts are back in motion.
how cool is that?
edit:
anyone notice that wall street is now a bookie? you can place bets on presidential candidates!
after posting up my plays, the market moved up. cfc denied the bankruptcy "rumor" and my plays all edged down. typical, as soon as i shoot my mouth off, the market punishes me. so, in retribution, i bought 130 jan dia call when dow was +10ish. in response, the market slides off 60 points and my puts are back in motion.
how cool is that?
edit:
anyone notice that wall street is now a bookie? you can place bets on presidential candidates!
Great Drunkle. Now that you own both long and short position, this basically means the market isn't going to be moving one way or the other until you exit one side. Thanks for nothing, and screwing the rest of us in the process :)
Still waiting for stockstradr to post since it's a down day today. Was missing him yesterday, because it was an up day yesterday :)
----- Sour grapes for everyone!
flu:
when i figure out how to "rent stocks", then i'll have up, down and immobile positions! what will happen then... a singularity opens up and swallows the market whole?
it's gratifying to know, however, that the market moves (opposite) to whatever i do. fear me! i am the bringer of 401k doom, destroyer of retirement accounts, decayer of day traders, bane of discount brokers and annoyer of real stock investors!
btw, my scottrade guy corrected me when i called my put options "shorts". he called them long puts. i'm still confused as to what exactly entails "long" or "short".
drunkl, we must have graduated from the same trading school. LOL
Mr. Wrong
Close at $5.47. Ouchie ouchie ouch ouch
Wow - $7.60 at 1:16am, $5.47 at 2:46pm.
A buying opp, or a sign of the end?
They claim there is "no substance to the rumor that Countrywide is planning to file for bankruptcy..."
But nearly every news outlet is reporting the same thing.
Countrydied?
@drunkle
btw, my scottrade guy corrected me when i called my put options "shorts". he called them long puts. i'm still confused as to what exactly entails "long" or "short".
Options work different than stocks.. though they tie to the price of the share. Options are holding a 'bet' on a future event. All option purchases are effectively 'long'.
Purchase stock: Long position because of 'purchasing' an item (share in this case). You get dividends(if any). Maximum loss can be full price of stock, maximum gains are taxed at either income rate(STCG) or 15%(LTCG) (unless lower income bracket in which case it may be 10% or 5%)
Sell stock short: Short position because you 'sold' something you do not yet have (so you are short on that position). You 'receive' money when you commit a short position because of the sale. The money has a cost (generally the margin rate on the amount of money involved), but this cost can be written of on your taxes (investment interest expenses). Maximum loss is full price of stock plus carried interest expense. Maximum gain would be like stock purchase but in the opposite direction and of course interest rate subtracted.
Buy a put: Long position on the option to sell stock at strike price at a future date. Betting on stock movement down. (you did not sell a put without having the put. The originators of the put could be said to be having the short position). Puts are a way to control large blocks of stock with a small amount of exposed capital. Maximum loss is only the purchase price of the option. Maximum gain is number of controlled shares x movement above strike price - price of option. Taxed at income rates.
Buy a call: Long position on the option to buy stock at a strike price at a future date. Betting on stock movement up (the originator of the option could be stated as having a short position on the option, but since your action is a purchase.. it is a long position). Calls are also a way to to control large blocks of stock with a small amount of exposed capital. Max loss is only the purchase price of the option. Maximum gain is number of controlled shares x movement below strike price - price of option. Taxed at income rates.
You probably know most of what I stated above.. just being thorough for the other readers out there.
Me thinks it's the ATT CEO coming out saying people aren't paying their bills that sort of triggered the end of the day sell off, or at least that's what the news is saying.
Just for fun. I called countrywide to quote me on the best available rates as of today. Person on the phone was actually pretty nice and surprisingly told me to stay put (just checking if they would try to talk me into cashing out equity, etc)
$600k jumbo, 0 points, 65% ltv with fico 780+, full doc, 7.635%
$417k conforming, 0.5 points, 46% ltv with fico 780+, full doc, 5.625%
Ouch. Wondering when and if conformings drop below 5% will happen
Just wondering how CFC is going to find customers, especially in CA. The only solution (partial) I would say is to steal good customers away from elsewhere. But how?
selfportrait
----- Sour grapes for everyone!
They claim there is "no substance to the rumor that Countrywide is planning to file for bankruptcy..."
It's in the bag then. The management is just stalling while they load up their SUVs with stolen office supplies.
$600k jumbo, 0 points, 65% ltv with fico 780+, full doc, 7.635%
$417k conforming, 0.5 points, 46% ltv with fico 780+, full doc, 5.625%
Those are ridiculous LTVs, how many people have 35% down?
$600k jumbo, 0 points, 65% ltv with fico 780+, full doc, 7.635%
$417k conforming, 0.5 points, 46% ltv with fico 780+, full doc, 5.625%
Those are ridiculous LTVs, how many people have 35% down?
Me :) But forget about that.
As I was pointing out, I'm not seeing how CFC is going to find new customers or steal existing (good) customers elsewhere without offering a better rate or some incentive or some sort. CA market is going to be tough. imho. Maybe new younger people, but how much of these people are have 20% AND are in the mood to buy? Going to be interesting.
It's extremely rare to see a stock as widely followed as Countrywide fall to the degree it's stock did today on a "rumor" that wasn't ultimately substantiated to some degree. I suspect CFC is right on the brink. Generally, where there's smoke, there's some degree of fire. Look for more lines of depositors forming in front of CFC branches in coming days...
mr wrong:
i haven't graduated yet, but i'm getting there. my school? http://www.piggington.com/forum. professor ucodegen at the helm today.
hopefully, i can write off my tuition fees, they're killing me.
uco:
seems like the tax basis is the most important thing to note... taxing options at full income rate blows...
All option purchases are effectively 'long'. Not true, you can write puts and calls, essentially shorting them.
Josh
As I was pointing out, I'm not seeing how CFC is going to find new customers or steal existing (good) customers elsewhere without offering a better rate or some incentive or some sort.
You've just asked the 64k question. Unless you come up with a good answer, their goose is cooked. I've said since last year they were headed for BK, based on that same question. Their whole business model, what made them profitable is no longer possible. So either they go back to doing conforming loans which are the grunt work end of lending, or they die. Even if they do go back to traditional types of lending, now they are competing with every other bank that does the same thing. I'd bet their costs are a lot higher, considering their costs of borrowing have soared.
Josh
@drunkle
seems like the tax basis is the most important thing to note... taxing options at full income rate blows...
Yes it does... as with most taxes.. but you have extraordinary leverage with lower risk with options... if you are careful. The tax at income rate is similar to STCG(Short Term Capital Gains). Short term capital gains are for issues held less than a year, and options generally have a less than one year period. Remember that with options, you are often making a contra bet with the originators, who are often the so called experts who may be running mutual funds (They will be the ones on the short side with options).
NOTE: On options spanning more than 1 year period, I would need to check on their tax status. They may be covered by LTCG. Depends upon the amount of time the option is held.
Thanks for calling me 'professor'.. though I really consider myself a gifted amateur. I figured that working for a salary was not going to cut it these days.. so I have set out to teach myself much of what the experts don't tell you. In 1997 (amazing how you can remember things that change course of ones life) I re-ran numbers from a portfolio that I was going to set up in 1988 and never got around to. After much crying in my beer, I took action to learn... of course I had some more crying in my beer in 2000-2001, but it wasn't nearly as bad as the revelation in 1997.
@barnaby33
All option purchases are effectively 'long'. Not true, you can write puts and calls, essentially shorting them.
Writing options are different than purchasing an option. This is why I made the distinction on purchasing an option. In the case where you are writing or originating an option, you are effectively on the short side. If you look at where I put in italics on this entry, the originators of the put/call could be said to be having the short position. See sections specifically dealing with Buy a put, Buy a call.
Here is the mashup of CFC and KFC
http://bp1.blogger.com/_wFWqWIH-WFU/Rw4y...
seems like the tax basis is the most important thing to note... taxing options at full income rate blows...
Not suggesting this in any sort of or form. But considering our beloved government is considering wasting taxpayer's money on bailouts....
Have you ever looked at the brokerage statement and figured out what transactions get reported to the IRS and what doesn't and how things get reported :), particularly paying attention to the buying/selling, writing of options, and writen options that are left to expired???? The analysis would be interesting the implications would be left an exercise to the reader....
selfportrait
----- Sour grapes for everyone!