Ambac Soars 50% on Collateral Posting
July 10th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
See what I mean about buying calls when everyone is sure the end of the world is upon us!
Except… I bought GM calls and not Ambac calls. HA. Woops. Oh well, GM could unveil a free-energy hovership, with Cheney himself at the controls, by the time my GM 17.50 strike calls expire on July 18th… Right? * grimace * Perhaps that’s slightly ambitious…
On a serious note, someone asked me if I thought GM was a long term candidate for buy and hold.
No.
But that has nothing to do with GM. I don’t hold any stocks long term.
By rolling the dice on those call options, I was simply expecting a pump and dump short squeeze since the consensus on the street was that GM was doomed, a candidate for bankruptcy, etc. Those things appear to be true—but many times, what happens in cases like that…
Well, look at Ambac.
Pop goes the weasel.
It’s so easy to screw with shorts, short term. Bullshit press release. Market makers collude and stand on the bid for a few minutes or even hours. Maybe the index futures take off bullish. It doesn’t take much to get them to cover.
Via: CNN:
Shares of Ambac Financial soared by more than 50% Tuesday after the bond insurer said it had ample collateral despite downgrades from credit raters.
In a statement released Tuesday, Ambac said credit rating downgrades of its Ambac Assurance bond insurance unit resulted in the company posting $506 million to cover its guaranteed investment contracts (GICs). It also was forced to post $270 million for terminated investment agreements.
