Bankruptcy plays - Trading-Lab

breakout · #1 08-15-2007, 04:07 PM

not sure if this is the correct thread for this.

has anyone ever traded any bankruptcy plays at all? For example, you short a company you think it's going to end up bankrupt or which has already filed for Chapter 11 and then cover your short as it approaches 0. delphi and kmart are a few examples……

TapeReader · #2 08-20-2007, 07:19 PM

yes, that is the way you want to play bankruptcies. Short the rumor, buy the fact. I wouldn't advise playing them on the long side, unless you are very "connected" and do a lot of research…..

breakout · #3 08-21-2007, 04:49 PM

why not build a portfolio of bankrupt stocks to spread risk a bit…

BottomPicking · #4 08-22-2007, 03:57 PM

well, you are not really diversifying risk very much, since most of them will end up worthless anyway…..

doji · #5 08-24-2007, 09:15 PM

most bankrupt companies don't end up like KMART

BlueChips · #6 09-06-2007, 05:31 PM

James Altucher describes one way of playing bankruptcies in his book "Trade like a Hedge Fund". You might want to check that one out.

ouch · #7 09-28-2007, 06:06 PM

so there's really no way to play bankruptcies and profit consistently from them?

Iacotel · #8 10-11-2007, 04:17 PM

I tried playing bankruptcies and OTCBB stocks in general with negative results so far. I built a small portfolio(in $$ terms) of more than a dozen stocks to spread risk as much as possible. So far I'm down about 60%. I made money on some of them. I didn't on most of them and the winners were not "winners enough" to balance the losers.....

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#1 08-15-2007, 04:07 PM
breakout Member Join Date: Jun 2007 Posts: 63	Bankruptcy plays not sure if this is the correct thread for this. has anyone ever traded any bankruptcy plays at all? For example, you short a company you think it's going to end up bankrupt or which has already filed for Chapter 11 and then cover your short as it approaches 0. delphi and kmart are a few examples……

#2 08-20-2007, 07:19 PM
TapeReader Member Join Date: Jun 2007 Posts: 37	yes, that is the way you want to play bankruptcies. Short the rumor, buy the fact. I wouldn't advise playing them on the long side, unless you are very "connected" and do a lot of research….. __________________ A lonely trader

#3 08-21-2007, 04:49 PM
breakout Member Join Date: Jun 2007 Posts: 63	why not build a portfolio of bankrupt stocks to spread risk a bit…

#4 08-22-2007, 03:57 PM
BottomPicking Junior Member Join Date: Jul 2007 Posts: 10	well, you are not really diversifying risk very much, since most of them will end up worthless anyway…..

#5 08-24-2007, 09:15 PM
doji Junior Member Join Date: Jun 2007 Posts: 20	most bankrupt companies don't end up like KMART

#6 09-06-2007, 05:31 PM
BlueChips Member Join Date: Jul 2007 Posts: 49	James Altucher describes one way of playing bankruptcies in his book "Trade like a Hedge Fund". You might want to check that one out.

#7 09-28-2007, 06:06 PM
ouch Junior Member Join Date: Jul 2007 Posts: 24	so there's really no way to play bankruptcies and profit consistently from them?

#8 10-11-2007, 04:17 PM
Iacotel Italian Trader Join Date: May 2007 Location: Roma Posts: 43	I tried playing bankruptcies and OTCBB stocks in general with negative results so far. I built a small portfolio(in $$ terms) of more than a dozen stocks to spread risk as much as possible. So far I'm down about 60%. I made money on some of them. I didn't on most of them and the winners were not "winners enough" to balance the losers.....