The TAXI Short

You can read this post I published in July to get a better understanding of my thinking.

taxistockI know most people won’t remember or read the past post so I’ll summarize, the stock TAXI is a bank that finances taxi medallions.  With Uber looming, the value of the medallion should decrease.  In some parts like Chicago, medallions that were thought to be worth half a million,  are only a quarter of a million street value.  This means that TAXI is financing an asset that is depreciating which is not good for anyone involved.  Imagine buying a car for $50,000 and it being worth $25,000 a few months later.  The bank still wants their money but the asset is worth far less which leads to people not paying back the loan.

long-putI ended up buying 5 put options valued at $.70 (each contract is 100 shares so the total sale was $350) and sold them today for $1.40 (roughly $700) in 2 months time making me about 90% on the investment (once fees are considered).  Taxi dropped by 12% today which made all of this possible.  I’m sure I wouldn’t be writing this post if I had lost the entire investment.  This is the first time I’ve made money on an option play so it’s good to know that my sound logic could actually be executed for some profit.  Now if I weren’t such a pussy only willing to risk $350 dollars…