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Trade Alert: Another (very speculative!) BK Trade

November 10, 2014 by Cody Willard

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.

 

 

 

 

 

 

Related posts:

Trade Alert: Get More Defensive Into What's Likely Blow-Off Top Action
Making a disciplined sell. And ask me to analyze any stock during today's chat...
Trade Alert: More longs and shorts + Market analysis
Cody Kiss & Tell: Fitbit, Qualcomm, Virtual Reality & more
Stock quick shots
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Filed Under: Trade Alert, Trading

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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