Theoretical Countrywide (CFC) Play Update

by Ryan Barr on January 7, 2008

in Investing

So there are times that I am glad I didn’t actually put on a position.  This is one of them.  Take a look at the current state of CFC.  This stock is just getting hammered, again!  Today it dropped $0.78 or 9.6% – there wasn’t really any real news!

Personally, I’d be getting a little shaky here.  There are roughly 9 days left till expiration and CFC is really, really close to the break-even on this trade.  I’m not exactly sure what will happen, so I’ll keep posting updates as we move along.  Remember, this is not a trade that I recommend by any stretch… This was simply an interesting idea on a weak company to build a synthetic covered call by selling a put on CFC.

As a company CFC has a lot of problems.  It could go bankrupt and you would be liable for $750 for each contract you shorted.  If you’re selling insurance, just realize that sometimes you have to pay out! Anyhow, fun times.  Lets see how it plays out.

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