Closing 2 trades and a look back on the two remaining live ones

By: ispeculatornew
Date posted: 02.18.2010 (5:00 am) | Write a Comment  (8 Comments)

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It is now time to close 2 trades, one that went badly and the other which went better than I could have hoped. I will start with the good one!

LONG NFLX/SHORT NILE

Blue Nile is a difficult stock to short because it is very volatile and trades at very high P/E’s compared to its peers (in my opinion). While I like the company and think it does have a very good future, its high ratios continue to shock me. I had gone short against Netflix, who announced very good earnings as well as a few more partnerships. This was the best example of a long/short trade that went for the best as Netflix gained 26.61% while Blue Nile lost 17.51% of its value for a total gain of 63.04%***

***As explained in the past, when you do long/short trades, you actually put up margin only, no capital and so returns are divided by .7 to account for the fact that 10,000$ portfolio would not have 10,000$ short and 10,000$ long but rather 14,000$ long and 14,000$ short.


LONG GOOG/SHORT BIDU

I knew that shorting Baidu was a risky proposition but simply believed it was also an overvalued stock at this point. I did turn out to be wrong. Google did remain steady (-2.19%) but Baidu gained (-15,82%) enough to make me a loser on this trade, a loss of 24.79%.


The other two trades that I currently have are both going fairly well so far:

LONG PCLN/SHORT EXPE +9,64%

LONG AAPL/SHORT AMZN +8,67%

So far this year, it gives me an average return per trade of 14.14%, well above expectations. Remember that I was quite happy last year with the 2,53% return I had given the short time the average trade lasts. I should have a new trade next Monday, hoping that they can continue to do well!

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8 Comments

  1. Comment by OneDay — February 18, 2010 @ 9:04 am

    Keep on your great work!!!!! 2 more trades to come :p

  2. Comment by IS — February 25, 2010 @ 8:03 am

    @OneDay – Haha, yes working on those:) Thanks! Any ideas?:)

  3. Comment by vito — February 18, 2010 @ 9:38 am

    I still think that long GOOG/short BIDU was a very good trade, and one that in the long term would be profitable. I guess the stop loss kicked in. Too bad. I would keep still an eye on it….

  4. Comment by IS — February 25, 2010 @ 8:04 am

    @vito – I agree 100%, I still believe in the trade, but discipline is key so I had to get out, it might become another trade although I did that 1 time in 2009 and it backfired so I hesitate to do it again, especially with a position like Baidu, which is so volatile.

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