T-minus ? until Countrywide goes under.. . .

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Prior to todays announcement, Countrywide's stock was deeply oversold. A bounce was not completely unexpected.





It is often the case that when bad news is anticipated stocks stocks decline, and when it is finally delivered, stocks will rally. The inverse is also true. Have you heard the expression, "Buy the rumor and sell the news?" You can also "sell the rumor and buy the news." I remember in June 2006, the markets sold off for two straight weeks in an ugly correction. The selling was in anticipation of a bad report on inflation which was going to signal another interest rate hike. On June 14, 2006, the news was finally announced, and it was bad. The market reacted with a huge rally. This is what is going on with Countrywide.





Don't be surprised if countrywide rallies for a while then runs out of steam and rolls over hard to make new lows. I would still consider Countrywide a shorting opportunity when it becomes apparent the rally has lost its momentum.
 
<p><em>Well, Irvine Lurker, if they don't pay, can't they be foreclosued out by the assns? You could in Florida.</em> </p>

<p>Yes you can. However, it was abused and had some minor teeth pulled. You now must be both over $1800 past due and one year past due.</p>

<p>However, the one time I made a mistake of fighting my HOA and not paying an unjust bill, I found out just how big of a PIA it was trying to catch up to the fee generating machines the management company turns the account over to.</p>
 
<p>Yes I think this is going to be a definate shorting oppurtunity once I see how things pan out. I can expect a short term runup in anticipation of a rate cut but I think there is no way in hell they are going to swing back to a profit. The real question is does it become immediately evident or take 3 months until the next call.</p>

<p>Any of you guys play both puts/calls at the same time when you know something will happen but its a crapshoot as to which way it will go? I can see this being the case on this stock where both up and down are likely going to happen, its just a matter of which first. Could either have big profit taking on monday or a rally...</p>
 
Straddles are almost always a losing position because you are paying premium for both legs, and only one can turn out profitable. To make money the profitable leg must be so profitable that it can overcome the double premium you paid for it. That doesn't happen very often. Usually, people will sell straddles in an <a href="http://www.poweropt.com/ibutterflyspreadhelp.asp">Iron Butterfly</a>. The only time straddles are sometimes a good idea is when a stock has been very quiet and the volatility is unusually low. This drops the time premium in the options and often proceeds an explosive move.





Long answer to say that I don't play straddles.





With as volatile as CFC has been lately, I imagine the options are very expensive. If you knew where it wasn't going, you could short the options and make the premium, but that is very risky unless you are putting on some kind of <a href="http://www.poweropt.com/bcspreadhelp.asp" linkindex="7" set="yes">Bear-Call Credit Spread</a> or <a href="http://www.poweropt.com/bpspreadhelp.asp" linkindex="8" set="yes">Bull-Put Credit Spread</a>.





Personally, I am going to watch for a nice rounded top formation or some kind of bounce off a resistance level for a low-risk short entry in the stock itself.
 
<p>Good answer...</p>

<p>My few options trades have been quite positive on small money so I have yet to get stung and am still learning about them. What is your favorite site for viewing options and if possible historical charts? That is one thing that is lacking on the major sites that I haven't found to help out with seeing the swings on the options versus the stock price. You referenced poweropt.com there, do they do this?</p>
 
sre - my opinion: When trading options, ignore all technical indicators on the options movement and use only the fundamentals and technicals on the underlying stock for evaluation of the odds on the trade. Use the option greeks for determining which option you will trade.
 
<p>"In no way did I expect what happened in August, where it was a complete collapse, a seizing up," Chief Executive Angelo Mozilo said on a conference call. "There has been, in my opinion, a significant structural change in the market, a permanent structural change."</p>

<p>Mozilo said that, after adding liquidity, reducing market risk and eliminating an expected 10,000 to 12,000 jobs, "I think we have a much better chance of success than any other player in the mortgage space today." <a href="http://www.reuters.com/article/businessNews/idUSWNAS860620071027?pageNumber=1">Link</a></p>

<p>Thanks goodness, I was getting worried there...</p>
 
<p>Well Its Monday and reality seems to be setting in again for the trading of CFC. Friday must have just killed the short player. But here we go down again. Its already back down a dollar this morning. Back to the 5% a day drop that seems to be the norm for this equity. Got to give Mozillo and his PR firm a thumbs up for the show on Friday. It sure sent the stock up like a rocket. </p>
 
What a dope. Caught lying to the public (Sabaines Oxley) will end with the orange one in jail. His plan to fire thier way back to profitalbility drips of arrogance.
 
<p>Interesting tidbit from this article about CFC.</p>

<p><a href="http://www.thestreet.com/_yahoo/newsanalysis/banking/10387260_2.html">www.thestreet.com/_yahoo/newsanalysis/banking/10387260_2.html</a></p>

<p>"Also Monday, a former Countrywide vice president, Quan Zhu, 43, agreed to settle insider trading charges. </p>

<p>The SEC filed the charges against Zhu in a Los Angeles federal district court on Monday. The SEC alleges that Zhu traded Countrywide stock in October 2004 "while aware of confidential negative earnings information" that was about to be released on the lender's third quarter that year. </p>

<p>Zhu settled the charges, without admitting or denying the allegations. He agreed to pay a total of $108,840 in fines and disgorgement. </p>

<p>The SEC previously filed insider trading charges against two other former Countrywide employees for involvement or trading on the same information. Both have settled their cases, the SEC says."</p>

<p>"Compounding the poor earnings, the SEC is also looking into CEO and co-founder Angelo Mozilo's accelerated sales of Countrywide stock under a 10b5-1 plan. Mozilo has made more than $100 million on stock sales this year, even as Countrywide shares have tumbled more than 50% amid the worsening housing market."</p>

<p>The Tan Man's SEC problems are well-known but I was not aware of the other guys. . .interesting.</p>
 
<p>Funny: Mortgage brokers smack talking Countrywide</p>

<p><a href="http://forum.brokeroutpost.com/loans/forum/2/179003.htm">http://forum.brokeroutpost.com/loans/forum/2/179003.htm</a></p>

<p>Per awgee's comment below - I posted it right after seeing a link in the comments in someone's blog (housingbubble?).</p>
 
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