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Microcap & Penny Stocks : Trading post-bankruptcy bounces -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (86)	7/11/2009 9:58:58 AM
From: RockyBalboa	Respond to of 93

Thanks, I have noticed :) >> Message 25773926 Unfortunately I was slow in grasping that stock futures were still open a few minutes; I could have shorted GM futures at good prices (as they have converged towards no discount from 60% discount). Regarding GM bonds (I own shares in a conduit owning GM bonds), I feel that it has not been clearly stated how bondholders would receive new GM stock: it was contemplated that 10% of the new GM go directly to the holders of old GM bonds; rather than the old company. The MLCO webpage says that none (neither common stock, nor bonds) will have any connection to new GM. For the old common stock it is pretty clear that they receive squat. But for bonds? I guess all the commentators have not been familiar with the ongoing squeeze and price distortion in old GM stock; with the entire issue shorted and virtually no possibility to open new short positions the market remains inefficient, simply put. When opening GM options positions was abolished things got even worse. Before, one could have created some short interest through shorting calls, regardless how underpriced they were. This is where naked shorting would help - stock would fall to a level where it is approbiate and be it nearer to zero.

To: Glenn Petersen who wrote (86)	7/12/2009 7:24:25 AM
From: RockyBalboa	Respond to of 93

I have talked to some brokers because I wanted to know whether there are incidents of early exercises of call options. So far there is no evidence that this occurred; on the other hand they could not reject the idea. So they see no urge to talk. Occurrences of early exercises would point to the cornering of the market because of a potential reward. And why would it make sense to early exercise; since the option traded at no or sometimes even a small negative premium. Had the market worked the call would never have developed a zero premium (and the pair a parity of -30%). "Existing short interest in calls leads to the purchase of common stock (at grossly exaggerated prices)": -assume you have a short call position ($1 strike) like I had; since GM is for all purposes worthless a $1 call must expire with no settlement. -The purchaser of said call would have every incentive to raise the price as far as possible and then, to early exercise the option. -Since you need to deliver stock you would normally end up with a short position. Since short positions can not be opened your broker turns around and buys you in on the same day. The person who exercised the call turns around and sells the stock. -Normally you would quickly move to replace the short call position on the other day. Now this is the crucial thing: Since this is not possible any more (as no broker allows to open a new options position since latest June 5th) you realise your loss with no recourse; with no possibility to replace the options position for later gain. The combination of not shorting the stock on delivery (effectively meaning cash delivery of the contract) and no longer opening short calls leads to a money transfer to the options buyer which can not be reversed. This is where authorities should focus on, and where reg SHO created real harm. But I guess, this is a futile christmas wish.

To: Glenn Petersen who wrote (86)	7/13/2009 10:21:33 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 93

Trading in GMGMQ shares can be halted for the next 10 trading days, and Finra officials are expected to release an official notice to investors next week explaining exactly what the securities represent. The regulator also plans to change the stock’s ticker symbol before allowing investors to resume trading, officials said. The funniest thing is that European Exchanges did not bother about the regulatory halt in the U.S. In Europe (on three different exchanges, the EBS, the SBF and SWB) the GM stock trades as if nothing happened.