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Strategies & Market Trends : Contrarian Investing

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To: pcyhuang who wrote (1520)	8/25/2007 12:09:06 AM
From: pcyhuang	Read Replies (1) of 4080

NFI -- Defending the PUT/Call Combination Alaris wrote: Message 23825255 >A move like the one you described could just as easily bankrupt you I agree with you that an option player should be very careful in dong this high-risk combination (-put + call). But I think NFI is a unique situation worthy of such a combination primarily because of the following considerations: 1. It is the only company in the depressed mortgage industry that has done a 4:1 reverse split. So a put with a strike price at $10 is really a put on pre-split NFI at $2.50. 2. More than 90% of NFI's float has been sold short by the pessimistic players. 3. NFI is about to delare a rights offering, which under the new SEC SHO regulation, would force the naked shorts to cover. 4. NFI is backed by the Wachovia Bank and Massachusettts Fiancial. For futher details, please refer to the discussion thread on the Board of Contrarian Investing. My posting of "Confession of an Option Trader" is to be on record for such a recommendation. This is not a short-term play but an expected work out in 2009-2010. Do you have the patience for a potential 10x bagger? pcyhuang

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