Brian Perry
Senior HTF Member
- Joined
- May 6, 1999
- Messages
- 2,807
While it's not my main job, I like to dabble in the financial markets, whether it's stocks, options, or commodities. What happened to me this last weekend is enough to remind me that it's a very strange world out there and I might be better off sticking with safer investments.
As most of you know, American Airlines has been on a path to bankruptcy over the past several months, and was threatening to file for bankruptcy last Tuesday if all three of its unions didn't accept stiff wage concessions of $1.8 billion per year. (American lost $5.3 billion over the last two years, so I'm not sure that the $1.8 billion in savings would even help them enough.) With the stock trading around $3.80, I bought some April 5 Puts on Tuesday, which gave me the right to sell AA stock for $5. I was predicting the flight attendants would reject the concessions and AA would immediately file for bankruptcy as promised.
Well, I was right...kind of. The flight attendants rejected the plan but then (to my dismay) were allowed one extra day to change their votes, thanks to some technical issues with the voting system and also because AA sweetened the deal at the last minute. The votes were recounted and the union narrowly accepted the proposal. The stock surged over $5 on Thursday, which is when my options expired--due to Good Friday. I decided not to exercise my Put options and thus my entire investment was wiped out.
If that weren't bad enough, yesterday we learned that American had a "secret" bonus plan for its top executives that was disclosed just after the final union voting. The flight attendants union, understandabley livid, said it was rescinding its acceptance of the pay cuts and will now conduct a re-vote. Basically it sounds like American is now screwed and is very likely to file for bankruptcy next week. Unfortunately my options are worthless now, thanks to incredibly bad timing and a scumbag executive team at American.
Anyone else have any investing horror stories? (But don't get me started on my Phillip Morris position!)
As most of you know, American Airlines has been on a path to bankruptcy over the past several months, and was threatening to file for bankruptcy last Tuesday if all three of its unions didn't accept stiff wage concessions of $1.8 billion per year. (American lost $5.3 billion over the last two years, so I'm not sure that the $1.8 billion in savings would even help them enough.) With the stock trading around $3.80, I bought some April 5 Puts on Tuesday, which gave me the right to sell AA stock for $5. I was predicting the flight attendants would reject the concessions and AA would immediately file for bankruptcy as promised.
Well, I was right...kind of. The flight attendants rejected the plan but then (to my dismay) were allowed one extra day to change their votes, thanks to some technical issues with the voting system and also because AA sweetened the deal at the last minute. The votes were recounted and the union narrowly accepted the proposal. The stock surged over $5 on Thursday, which is when my options expired--due to Good Friday. I decided not to exercise my Put options and thus my entire investment was wiped out.
If that weren't bad enough, yesterday we learned that American had a "secret" bonus plan for its top executives that was disclosed just after the final union voting. The flight attendants union, understandabley livid, said it was rescinding its acceptance of the pay cuts and will now conduct a re-vote. Basically it sounds like American is now screwed and is very likely to file for bankruptcy next week. Unfortunately my options are worthless now, thanks to incredibly bad timing and a scumbag executive team at American.
Anyone else have any investing horror stories? (But don't get me started on my Phillip Morris position!)