Well, my 100% gains in Abercrombie & Fitch (ANF) puts are about to become over 200% gains.
Long-time readers know that for many weeks, I’ve been hyping the oversexualized ANF as a great short, since it has historically fallen hard from its overvalued prices to the depths of Sumerian darkness. In recent months, my x-ray vision spotted a descending channel that I’ve never seen mentioned anywhere else.
I am doing a little trimming here and there this morning. My cash is up to 17.7%. An example of what I’ve taken profits on is Abercrombie & Fitch (symbol ANF) on which I own August 19th $40 puts, which are up 77% from my purchase. I have sold 40% of the position based on this midline touch, but I’m sticking with the rest.
I’ve mentioned Abercrombie & Fitch repeatedly in years past as a great long-term short candidate, and it’s unfolded beautifully. Take a look at how, almost incredibly, the stock has come full circle to its financial crisis lows. Given the extraordinarily lofty state of the market in general, however, I think this stock isn’t done falling.
Well, I confess I had forgotten what it felt like to bank profits on a daily basis. It’s a nice feeling. Of course, the anti-Christ Yellen has done a fine job yanking away such feelings in times past, so naturally I’m nervous about Wednesday. All the same, these little BTFD rallies keep failing, which warms my heart.
The small caps are approaching support. Of course, my hope is that the trendline does, in fact, break. The FOMC will settle that matter, I think, one way or the other.