They're like the ticker RDBX from last summer. We knew how it was going to end… And now the stock isn't even listed anymore.
So here are the rules if you can't ignore these degenerate bankruptcy plays…
How To Trade Sketchy Bankruptcy Plays
BBBY and PRTY are some of the most liquid big gainers of the week, so I don't expect you to ignore them completely.
There are ways to profit from the moves. But there's one big caution I have for traders about these tickers…
Why I Don't Like Them
The biggest thing I see people get tripped up with on these bankruptcy plays is they fall for the hype.
People see posts on Twitter that say PRTY is going to $1 and BBBY is going to $5...
And they believe it.
I'm not saying BBBY can't go to $5. But the problem comes when traders take a position and the stock goes up — they see profits and think it's great. So they hold it.
They think they're going to catch some gap-up moves and shorts will get squeezed, but the next day news could hit and it gaps down 30% and it never bounces again…
Then they keep holding for a bounce that never comes, they hold until it's delisted and literally lose everything.
The end game with all bankruptcy stocks is the same — they're going to zero.
And I don't like to see new traders lose everything.
How to Trade Bankruptcy Stocks Instead
The first rule for trading bankruptcy stocks is I don't like them on the first day no matter what.
But once they continue and prove themself — that changes everything.
Tuesday was the second day of PRTY's perk, and the best trade was in the afternoon. But it got destroyed yesterday...
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