Ryan Cohen (an activist investor popular with the WSB meme stock crowd) announced his ‘‘attack’’ on Bed Bath and Beyond today (BBBY).
Activist investors attack a company that they think is mismanaged by buying large amounts of shares and then being vocal about pushing for change trying to get a majority of the shareholders on their side and then instill a new board of directors or force current management to change course.
I’m currently playing this. When these pops happen, you usually can expect a massive selloff which is what we’re seeing, but normally you’ll at least get one more pop. In the case of BBBY we’re looking for that pop to come from either FOMO related to shorts or shorts themselves:
The P/L on the shorts in BBBY is -30%, near the 40% threshold that usually triggers clearing and the DTC calc (mine) is over 1 Day, which is generally the golden area to be in with these plays.
So expecting one more pop, I’m averaging into a position on this selloff trying to give enough time between buys so that with my buying power, I can keep my cost basis reasonably within reach. This trade is more of a gamble than the average trade I’ve been taking in the challenge so I’m only risking money I can afford to lose at this point.
As far as I know, Conq does not do any sort of multi-leg or complex options strategies. Just simple calls and puts. The most he does is take different strikes and expiries, for example his RSX positions.
