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Stopped out Capital One Financial (COF)

Another loser.

music selection: “Break Our Hearts Down” — Bullet Height

There are some bloggers out there that only report their successful trades and sweep their losses under the rug.  That is pretty dishonest.  I like to share when I step in brontosaurus poo.  Today is one of those days.

Capital One Financial leads the industry in making credit cards available to subprime borrowers.  They are also active in lending money for subprime auto loans.  I sold shares short on 10JUL2017 expecting the credit cycle for subprime borrowers to roll over.  There are signs the segment is falling apart with rising delinquencies but a rising tide lifts all boats.  COF is a beneficiary of a widespread rally.  I stopped out as of yesterday’s close and bought to close today.

Shares were originally sold for 82.16.  I bought to close at 103.13.  The trade was in force for 185 days and yields on an annualized basis minus 50.35% on a 1,279 loss.  I’m still in the trade for my short of Ford (F) but it is closing in on its trailing stop as well.  I may get shaken out before the subprime lending bubble pops.  It hurts but I’ve learned to honor my stops.  A lizard has to live to trade another day.

Devour your prey raptors!

{ 3 comments… add one }
  • Chris B January 11, 2018, 5:38 pm

    Shorts have been brutal throughout this bull market. Perhaps an income-generating defined-risk approach is justified?

    On the other hand, this may be interesting too:


  • Chris B January 12, 2018, 9:49 pm

    I just spent some fun money on 3 SHLD puts at the $3 strike with 2 years till expiration. I fully expect to earn ~58% on the position sometime in the next 2y!

    Unless they issue a cryptocurrency.

    • The Lizard King January 12, 2018, 11:27 pm

      Nice! You don’t want to short the underlying for sure. The borrow rate is over 50% a year most of the time.

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