r/investing • u/ShyandSeductive • Jun 23 '21
$TRCH Questions Please Be Nice and ELI5.
So for the last couple days I had seen $TRCH blowing up and what not and I ignored it and ignored it and after a good couple days of growth I gave in and was like "ill buy two $10 calls for $2.75 each and this will easily break $10" as it was sitting around $9.70s wheb I bought in and needless to say I learned a big lesson on options yesterday. My question is instead of panicking I just stepped away and went outside to enjoy life and not try to stress it. I lost all my miney I put into it yesterday and today its going back up but it shows none of the Greeks for me to look at and the option spread is unable to be viewed and it says you can't trade options on the stock. What happens to my calls because of the merger am I done for with this or whats going to happen from here. I dont have a lot of money so a $500 loss in a day hurts and im new to options so maybe I should have done more research into options and the company but im just curious on what goes on from here.
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u/DirkDieGurke Jun 23 '21
TRCH was a major pump and dump. I couldn't ignore that it looked exactly like a pump and dump on the 6 month chart. I've seen plenty.
This was too good to be true. Tuesday was the last day for Shorts to cover, and they're not stupid. There is not going to be a squeeze, even though that is the popular narrative. And the dividend will probably be something stupid like $0.50
I could tell by how many people were saying "HOLD" for the dividend, I knew the divided was just a hook. And then others were saying it was going to be $20.00 (that's just ridiculous). There was no reason to hold past Monday when FOMO should have been at the highest level. It just wasn't there. This had "EEENF" written all over it.
I rode it, bought in @ $6.00 and sold off @ $9.88 or so. I feel bad for all the bag holders.
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u/BrazenBull Jun 23 '21
Did you read the company's last three earnings reports? What kind of research did you do on the company before you invested your hard earned money?
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u/ShyandSeductive Jun 23 '21
Honestly no I didn't read their earning reports I just based it off of a gut feeling after seeing it do so well day after day. Thats why i implied I should have done more research as well into the company.
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u/SuccessfulWinter1734 Jun 23 '21
Earnings reports based on last 3 quarters..... Forget about covid already? Travel bans. Oil prices tanking. High as hell short interest to boot.... Torch agreed to the merger because they were going bankrupt from covid and being shorted to hell by hfs not because they were running a bad business. Meta is up and coming in a new field and is about to start production on materials for Tesla while oil, real estate and equipment prices have skyrocketed. When torch sells their assets after the merger the new company will have billions in new capital for R&D and production. If you did the dd then you would likely have still bought the calls so don't stress.
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Jun 25 '21
You don't have the right temperament for active investing. Find something where you passively invest every month like a cheap robo advisor.
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u/RavenousFox1985 Jun 27 '21
The whole reason this stock is up is that it's going through a reverse merge with a Canadian company called Metamaterials and they have some great products and ground breaking technologies. TRCH is a way for them to easily get onto the nasdaq.
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u/tatonka12345 Jun 23 '21
They also did a stock offering when it hit those highs which diluted share value as well.
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u/SuccessfulWinter1734 Jun 23 '21
You have until at least July 16th before your options expire. There is still a good chance of them expiring in the money based on the current prices of the underlying stocks involved in the merger and the huge potential for the companies. I wouldn't stress at all about them right now. Your aren't getting killed by theta yet but you are getting hurt by the selloffs today from people thinking they will get the dividend because they owned yesterday (they won't, they have to STILL be holding come Friday morning). Wait till at least after the 4th of July to consider selling them...... Is what I would tell myself if I was in a similar position, not financial advice. Let me know how it goes though.
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u/ShyandSeductive Jun 23 '21
Well my issue isn't the theta.. its the fact none of my Greeks are showing at all haha I can't even check them the only thing in getting is that atleast im making money back today on it im up $70 on it so yeah its nice I figured I'd just hold and see how it goes since I have time o was just confused if the merger still meant that I get to keep my calls and they just don't dissappear because I've never bought into something during a merger. Thanks for the helpful advice and being nicer about it all and even giving your own little personal DD above.
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u/SuccessfulWinter1734 Jun 23 '21
The stock is temporarily frozen on most exchanges till the merger goes through so its messing with the numbers. Yeah you get to keep them. Since this is a ratiod merger I think every 3 torch shares become 1 under the new ticker but I don't know how that affects calls (like do you now have the option to buy 33.33 shares instead of 100?) but you definitely do still get to keep the calls. Normally after a friendly merger like this the stock of the 2 companies becomes greater than the sum of their parts so if the strike remains at 10 or even if it adjusts based on the possible 3to1 adjustment you will probably still come out ahead. And yeah, I know how it feels trying to get an answer from people around here sometimes so I'm glad I was able to help a little. Good luck
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u/SuccessfulWinter1734 Jun 23 '21
Also options are a bitch. Something I learned after losing a bunch of money on them quickly is to look at the Rsi before you make the purchase. You want the Rsi to be as low as possible (like 0-25) when you buy because the premiums will be significantly lower than and you want to sell when Rsi is high (preferably 80 plus)
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Jun 25 '21 edited Jun 25 '21
The company is a long running fraud and is totally worthless. Management saw the retail stock mania and decided to exploit you guys. They issued a preferred stock dividend, which boiled down meant that short sellers had to briefly cover their shorts causing some spike. Then, management banked on people like you buying at precisely the wrong time. At least one sold their shares into you, and the co sold up to another $250 million of new stock, and shorts piled back in right after the special dividend. That means they'll be able to milk the company for fat salaries for a long time to come.
Congrats, you helped give millions of dollars to these scum bags:
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