Good morning and welcome back to the merry-go-round. Don’t let them spin you around so fast you can’t hang on.
I’ve got another highly speculative, very risky short-term bankruptcy trade I’m putting on today – Dendreon DNDN filed for bankruptcy today. Remember that the idea of the bankruptcy trade is to wait until a once big company files for bankruptcy and then to buy the stock at its new lows to hold for just a few days in the hopes that those who were smart enough to have actually shorted the stock on its way to bankruptcy will go ahead and cover their shorts and move on. We’ve had more success with what I call these BK Trades of late, but trying to game a short-term move like this is always very risky and should maybe even be considered a form of gambling. That said, the data from the action of stocks after they file bankruptcy supports this very contrarian trade over many years and hundreds of such filings. I only use a very tiny part of my own money for these BK trades, so be careful if you even consider doing this.
I’m buying a tiny bit of DNDN common stock around 24 cents and will scale into more if it gets closer to 20 cents and will be out of this trade completely within a few days, win or lose.