Short DWAC?

[djAdvocate]

i have mentioned this idea a few times before.  

i will freely admit that this is partially motivated by political animus.  so, you can disregard this recommendation on that basis.  further, i SUCK at shorting.  i have done it right maybe 10% of the time.  so, further reason to ignore me.

fortunately, you don't have to rely on that weak of a recommendation, when you have this:


www.morningstar.com/articles/1075325/how-to-lose-money-buy-digital-world-acquisition-corp


if this guy is right, this stock is at least 50% overvalued.  my reason for shorting it is that i don't like the fundamentals in media OR social media right now.  the combination of boredom and the sense that something better will come along than that which is offered by the baby boomers running this startup (none of which have any media experience), coupled with the very poor track record of Trump in the investing world lead me to conclude that this would be a good short play.

the company closed at $84.32 on Friday.  let's see how these THREE investments fare:

1) pure short at $84.32, with a target of $42.16- cover on or before 2/19/23
2) April 14 $50 put at $4.40, sell on April 1st, or on a clean double
3) Jan 2023 $45 put for $24.10, sell on December 1st, or on a clean double

let the fun begin........

[uncle23]

.....


everytime a novice shorts a stock the pros drive the stock price...

[djAdvocate]

doesn't surprise me.  as i said, i lose about 90% of the time, and the other 10% have NOT made up for it.

[djAdvocate]

DWAC went to 100, and then to 70.
still a long way from the mid-40's,

Pure short is +15%
April 14th put is about $3 now, down by 1/3.
Jan 2023 put is now $24.25, unchanged.

if all three were bought in equal $, "portfolio" is -6% as of today.
NOTE: it was up yesterday. 

[djAdvocate]

here are two articles on the SPAC that are quite unfavorable:


www.axios.com/trump-blowing-truth-social-launch-c2d4f1f0-5440-478a-acfa-b9462b64568c.html


medium.com/politics-mostly/7-reasons-why-trumps-truth-social-is-failing-spectacularly-341ab0043e38

i would note that 0% of the stock is held by insiders.  also not a good sign.

[djAdvocate]

Feb 20, 2022 1:07:38 GMT -5 djAdvocate said:

the company closed at $84.32 on Friday.  let's see how these THREE investments fare:

1) pure short at $84.32, with a target of $42.16- cover on or before 2/19/23
2) April 14 $50 put at $4.40, sell on April 1st, or on a clean double
3) Jan 2023 $45 put for $24.10, sell on December 1st, or on a clean double

let the fun begin........

$50 Put closed at $1.38 today, -69%- but I am taking a 55% loss on this- see below.
pure short is currently +25%
Jan 2023 is $25.15 + 4%

net loss = -9% so far.....

edit: i might have been tempted to hold that put, had i not already committed to selling it.  the stock was -7 points this week.  ALSO: the stock hit $59 this morning.  i would have been watching this stock like a hawk today, and would have sold the put as soon as the stock started to rally.  i feel confident i could have got $2 for it.  i might have even got $2.20 for it, since 50% would have been a nice round number- but i will take the more conservative approach and assume that i would have seen the gap this morning, and would have sold it as soon as the stock started to reverse.

lesson #1: the time decay of short term options is brutal. 

i am still feeling fairly optimistic here.  but not completely.  i have definitely handicapped myself by predicting it would fall quickly.

[djAdvocate]

this is an interesting article.  pretty positive on DWAC:


www.investors.com/research/donald-trump-stock-buy-now-trump-media-technology-group-tmtg-stock-dwac-stock-spac/?src=A00220


they only mention the investigation briefly, and don't recommend buying the stock.  they also point to the bullshit RSI on this thing, which is a 12 month RSI.  that takes the big jump after the announcement that the SPAC would become Truth Media (+1750% in a couple of days) as part of it.  a more standard measure of strength is 14 day RSI.  the 14 day RSI on DWAC is 40.  which is not zero, for sure, but it sure as hell is not 99.

anyway, this paper is pretty right wing, so glossing over these details is not surprising.  however, the fact that they didn't issue a BUY for this stock (despite the headline) is (more) telling.

[djAdvocate]

the future of Trump Media is settling in, i think.
i should have played this thing short in the investing game this week.

the stock was -10% today, so the short was +10% and the long put was +24% today.
the net result is that this tactic is now in the money.  net gain is 2.7% as of today.  but the floor is disappearing on this asset.  the next support is around 40, but at that price, my Jan 23rd option might very well be a clean double, which would put this "portfolio" at +32%.  but that is my optimistic forecast.

[Value Buy]

Apr 5, 2022 0:21:12 GMT -5 djAdvocate said:

the future of Trump Media is settling in, i think.
i should have played this thing short in the investing game this week.

the stock was -10% today, so the short was +10% and the long put was +24% today.
the net result is that this tactic is now in the money.  net gain is 2.7% as of today.  but the floor is disappearing on this asset.  the next support is around 40, but at that price, my Jan 23rd option might very well be a clean double, which would put this "portfolio" at +32%.  but that is my optimistic forecast.

Part of the reason the stock is tanking is Twitter news. With Musk now on the board and owning over 9% investors feel this would hurt Trump's ability to build a rightwing media outlet to compete with Twitter, assuming Musk makes Twitter a fairer media outlet for conservatives and Independents.

[djAdvocate]

Feb 20, 2022 1:07:38 GMT -5 djAdvocate said:

i have mentioned this idea a few times before.  

i will freely admit that this is partially motivated by political animus.  so, you can disregard this recommendation on that basis.  further, i SUCK at shorting.  i have done it right maybe 10% of the time.  so, further reason to ignore me.

fortunately, you don't have to rely on that weak of a recommendation, when you have this:


www.morningstar.com/articles/1075325/how-to-lose-money-buy-digital-world-acquisition-corp


if this guy is right, this stock is at least 50% overvalued.  my reason for shorting it is that i don't like the fundamentals in media OR social media right now.  the combination of boredom and the sense that something better will come along than that which is offered by the baby boomers running this startup (none of which have any media experience), coupled with the very poor track record of Trump in the investing world lead me to conclude that this would be a good short play.

the company closed at $84.32 on Friday.  let's see how these THREE investments fare:

1) pure short at $84.32, with a target of $42.16- cover on or before 2/19/23
2) April 14 $50 put at $4.40, sell on April 1st, or on a clean double
3) Jan 2023 $45 put for $24.10, sell on December 1st, or on a clean double

let the fun begin........

wow.  got crushed.

pure short + 43%
April 14 $50 = +40% (i already sold this at a loss, but was interested)
Jan 2023 = +14%

the last put looks like a bargain to me at $27.  it was in the money yesterday

[djAdvocate]

the long put is now up to almost $32.  +31%
"portfolio" gain is 7&

[Value Buy]

DWAC currently around $50
Surprised because with Musk buying Twitter and saying Conservatives and Republicans will be allowed back, THERE IS no reasonable need for DWAC

[djAdvocate]

i can't read your posts, VB.  <br>but if this is about DWAC rallying recently, yes it has.<br><br>this might be purely technical.  there is a small gap below $60.<br>we will see what it does after that.<br>however, i will also add that my short positions are pretty long<br>at this point. there are no further actions until November or something.<br><br>as a friend from college used to be fond of saying:<br><br>"there is still time to fail" <img text="" alt=" " src="https://i239.photobucket.com/albums/ff155/JiminiChristmas/ymamsmiles/wink.png"><br><br>

[djAdvocate]

Apr 7, 2022 11:42:12 GMT -5 djAdvocate said:

Feb 20, 2022 1:07:38 GMT -5 djAdvocate said:

i have mentioned this idea a few times before.  

i will freely admit that this is partially motivated by political animus.  so, you can disregard this recommendation on that basis.  further, i SUCK at shorting.  i have done it right maybe 10% of the time.  so, further reason to ignore me.

fortunately, you don't have to rely on that weak of a recommendation, when you have this:


www.morningstar.com/articles/1075325/how-to-lose-money-buy-digital-world-acquisition-corp


if this guy is right, this stock is at least 50% overvalued.  my reason for shorting it is that i don't like the fundamentals in media OR social media right now.  the combination of boredom and the sense that something better will come along than that which is offered by the baby boomers running this startup (none of which have any media experience), coupled with the very poor track record of Trump in the investing world lead me to conclude that this would be a good short play.

the company closed at $84.32 on Friday.  let's see how these THREE investments fare:

1) pure short at $84.32, with a target of $42.16- cover on or before 2/19/23
2) April 14 $50 put at $4.40, sell on April 1st, or on a clean double
3) Jan 2023 $45 put for $24.10, sell on December 1st, or on a clean double

let the fun begin........

wow.  got crushed.

pure short + 43%
April 14 $50 = +40% (i already sold this at a loss, but was interested)
Jan 2023 = +14%

the last put looks like a bargain to me at $27.  it was in the money yesterday

ok, time for a review:

April put - 55% (sold)
pure short = +72%
Jan '23 put +24

net = +14%

[djAdvocate]

i think i am going to close my position out today.
this one exceeded my expectations, and taught me a lesson.
i am better off not using leveraged instruments, and my instincts are pretty good,
especially when i exercise patience.

there is a bid on my outstanding put right now at $30.35, and the underlying is at $23.74

pure short = +72%
jan put = +26%
april put = -55%

total = +43%/3 = +14.3%

PS- i will check back in December and Feb to see if i might have been better off NOT pulling the plug early.

[djAdvocate]

Feb 20, 2022 1:07:38 GMT -5 djAdvocate said:

i have mentioned this idea a few times before.  

i will freely admit that this is partially motivated by political animus.  so, you can disregard this recommendation on that basis.  further, i SUCK at shorting.  i have done it right maybe 10% of the time.  so, further reason to ignore me.

fortunately, you don't have to rely on that weak of a recommendation, when you have this:


www.morningstar.com/articles/1075325/how-to-lose-money-buy-digital-world-acquisition-corp


if this guy is right, this stock is at least 50% overvalued.  my reason for shorting it is that i don't like the fundamentals in media OR social media right now.  the combination of boredom and the sense that something better will come along than that which is offered by the baby boomers running this startup (none of which have any media experience), coupled with the very poor track record of Trump in the investing world lead me to conclude that this would be a good short play.

the company closed at $84.32 on Friday.  let's see how these THREE investments fare:

1) pure short at $84.32, with a target of $42.16- cover on or before 2/19/23
2) April 14 $50 put at $4.40, sell on April 1st, or on a clean double
3) Jan 2023 $45 put for $24.10, sell on December 1st, or on a clean double

let the fun begin........

this position is already closed out, but i thought i would grade myself.
1) +79%.  better than my sale price, of course.
2) this one is over, and the record is shown above (no change)
3) Jan 2023 put is at $35.00.  i think that is above the sale price.

so, maybe i do better on long calls and puts and pure shorts?
only one test case.
note: my sale date was originally 12/1, so i am not sure where this ends up.
i will circle back again.

[djAdvocate]

the stock had a huge pop when Trump announced he was running for president.
it has slid down since then, but is STILL above where i sold it, so i did well to get out early.  the Jan $35 put was almost out of the money at one point.  

[djAdvocate]

this stock went all the way to $12.

tonight it popped up 20% over a settlement with the SEC.  the SEC said that the SPAC was set up to buy Trump Media.  it is, effectively, a fraudulent enterprise.  they fined them $18M.  they don't have to pay the fine if they don't merge.

edit: I forgot to add a Feb price.  it was $15-16.  so, if i had actually done this as a pure short, i would have made over 80%.  

so, i guess i am OK at shorting.  i just suck at options.