Friday, February 1, 2008

Microsoft (MSFT) bids for Yahoo (YHOO), Short XHB?

I missed the boat. The 31 a share offer from Microsoft for Yahoo has pushed the price to the 29 level. I got a bit greedy with how much premium I was trying to sell the put options. I could have made instant bank but now I got nothing.

On another note, this rally makes me want to short the S&P Homebuilders ETF (XHB). The market seems to be on looking at the good news and ignoring the stream of consistently bad economic indicators. Even though the government is bailing everyone out, the homebuilders are pretty low on the list. I tried to short a small position (just to see what it's like since I've never actually shorted stocks before) but couldn't borrow any shares. So I guess I have to just sell calls on it.

I also got out of some DRI options. There's a good chance it is going back to 20. Casual dining is a tough business right now.

1 comment:

Jimmy said...

Hmm... that's a good analysis, and an analysis that scares me. I am bullish on the home construction market AND on DRI! Hopefully you are wrong, haha.

I think homes are actually too cheap now... the homebuilding market really hasn't rallied, and I see shorting it over the next 2 months as a possible solution... but 3 months+ I see positive factors. And DRI is still disgustingly cheap, you may be right about 20... but I see them hitting 30 regardless of an unfriendly restaurant sub-industry