The LEAPS Trader
105 W. Monument Street
Baltimore, MD 21201
Tuesday, March 13, 2007
Email – # 360
** Buy Resources
I am currently traveling and will send you the complete details on this short sale tomorrow. It is for General Motors (NYSE: GM).
The share price today at $30 is deceptive. The company is basically worthless, even worth less than zero based on its balance sheet.
GM has been able to do some fancy accounting footwork to mask a continuing deterioration in its core businesses. Over the past few years, the company has been selling assets to raise cash to sustain itself.
Tomorrow, it will report its numbers and most likely come in with a profit.
However, this masks the huge issues that are hiding behind a maze of liquidity problems that could worsen quickly if we are headed for a recession.
Is GM too big to fail? That is the only saving grace that I see.
More details with follow.
This is my recommendation for now:
Buy the General Motors (NYSE: GM) January 2008 $27.50 PUT leaps (WGM-MY), currently trading at $3.20 on the offer. BUY A HALF POSITION TODAY for no more than $3.30.
There will be huge volatility in the shares in the days to come, especially tomorrow – we will BUY THE SECOND HALF in the days to come to average our entry position in case we get a “fake” rally in the share price after the press release.
Karim
