Feeling Lucky? Try and Cheat Bankruptcy on YRCW and SBGI. CIT Speculators got Crushed!
Jul 16, 2009 Small Cap Stock Picks
lots of companies are still going bankrupt or on the verge. CIT was the latest big company to bite the bullet. Well they aren’t bankrupt yet but the big man upstairs gave them the cold shoulder when they asked for help which means they likely will fall to their demise unless they receive the $3b or so they’re asking for in private funding, not likely.
I know several of the members here we’re holding through the CIT epidemic today unfortunately, trying to cheat bankruptcy is fools gold. I’m and idiot too i tried to cheat bankruptcy on GGWPQ.PK with a small position and lost nearly 50% so i’ve been there, done that. So while its easy to say hey lets just short these companies, thats also stupid idea as well.. Because its very possible that they coud come out of bankruptcy.
Such as YRCW which just rallied over 100% in a single session the other day on news about it getting closer to “not” going bankrupt. So the volatility swings both ways and its easy to catch the short end of the stick. Especially when they decide to halt trading on you and screw you over before you get the chance to exit the position. As I’m sure numerous people were in CIT for a simple day trade and caught got in the trading halt, only to lose 70% the following session.
Next up and coming Bankruptcy play is SBGI which has already dropped 50% in the last week or so. Now this is setting up for a possible strong rebound as looking at the intraday chart i would want to day trade this breakout on the long side but the though of getting caught in a ch11 trading halt? and get screwed like many did in CIT? yah i think i’m gonna have to pass on that one. Good luck if your balls are made of steel and you’re gonna try and play this one out!
