The 1:30 Hour

Legend is that the margin clerks get busy at 1:30. That is the time when we started our death plunge yesterday. I don't know if traders are now front running this or if it is happening again but we will find out soon enough.

4 comments:

Anonymous said...

Is there a way for me to hedge PFE's continues falling? I hate to sell my shares now for 24% loss.

Tsachy Mishal said...

You can sell covered calls but that only gives you a slight hedge. Buying PFE puts would allow you to hedge it but Puts are quite expensive right now.

Unfortunately there is no easy answer.

Anonymous said...

Thanks Tsachy. I recall that you got out of those phama stocks a while back and that was smart. I have not done options or short and have only long positions. It seems I will be trapped for a long time.

Tsachy Mishal said...

It is possible that pharma shares are cheap. If other countries do not follow Spain and Greece's lead by cutting the prices they pay to pharma companies than these stocks are worth a lot more than current prices.

It is quite annoying because pharma bears were bearish because they said these stodgy companies couldnt come up with new drugs. But the stocks were so cheap that they did not need new drugs. The bears turned out to be right but for a completely different reason that nobody foresaw. In all the years I only heard of a single person who was bearish on healthcare because he thought countries would lower the prices they paid, Jim Chanos. But after healthcare reform he reversed his position because he saw that under reform they would make more money.