Post a CommentWell, we have a big winner to close after Priceline shot up following grat earnings. The trade on Long Priceline (PCLN) and Short Travelzoo (TZOO) is currently up 44,49% and will be closed tomorrow morning on the open… so yes, there will be a new trade on Monday!
If you are wondering how it did so well, just take a look at Priceline’s chart just below and you will understand!
Hello, I recently started reading your blog and have found the commentary interesting and engaging.
I was wondering if you could please go into further detail regarding how you go about formulating particular trades.
Specifically, what is your methodology/rationale for pairing up two particular stocks?
That is, I understand why you might be long a particular company. And why you might be short a different company. You then seem to pair the two positions, and I’m not clear on how you came about the pairing.
I am assuming your trades are based on the spread in performance of the two positions — is this correct? Do you take equal positions in both sides of the pairing?
How do you pick the second stock for a paired trade? Is it a competitor in the same space that you think won’t do as well, or is it simply a company in a different space that you believe will perform in a non-correlated/independent fashion from the first company? Or is the ‘short’ company selection a method of trying to hedge against possible negative performance of the ‘long’ company?
[I did try to find an explanation in previous posts but was unable to clarify to my satisfaction]
Thank you for your attention and blog postings.
@nathan – Very interesting comment, I will be writing a post to answer this, probably to be published next week. Thanks for taking the time, lots of good questions in there, I’ll do my best:)
[…] in private or on this blog, it is related to the stock picks that we make. Here is Nathan’s comment: Hello, I recently started reading your blog and have found the commentary interesting and […]