Removing one long entirely and adding a new short…

I want to make a move or two in the portfolio — one sell and a new short position.

I wish I had done this when we had huge gains in it and the stock was still over $20 a share, but it’s time to do it now. We’re selling the Ciena.

Ciena’s biggest problem here is simply that it’s biggest customer is AT&T. And AT&T, while still increasing spending on telecom bandwidth in the core, isn’t exactly focused on growing their network right now, but rather they’re focused on trying to acquire and then integrate T-Mobile . And while the government is presently rumbling over the obvious anti-competitive and anti-consumer aspects of this this deal, I think it’s extremely likely that this deal does get done. And then we’ll be able to find some of the best plays for the integration of the networks that will come at that point, much at the expense of increasing the broadband capabilities throughout the network.

Which is where Ciena specializes. So while the trend of spending big to expand smartphone/app/cloud capabilities remains fully in tact globally, AT&T’s suppliers aren’t going to feel that boom quite as much as they otherwise would have. And even as I do expect that Ciena got the Nortel optical assets on the extreme cheap like it did and that the integration of those assets into Ciena proper is going to reap benefits, a lack of topline growth from a pause in their biggest customer’s spending patters has me stepping to the side. We’ll revisit it after the T-Mobile merger does/doesn’t go through.   We made a hugely profitable trade in this name by buying near-term dated calls before its most recent earnings report and with that sweet trade and selling the remaining small position of Ciena, I’m calling it a day in this name for now.

I also want to add another bank-run-rampant stock to the short side of the portfolio, Bank of New York. Long story short, this company has supposedly certified that all those millions of mortgages in the MERS system that were never properly conveyed through the chain of title, were properly conveyed. That is, they told all those investors who are presently suing all those TBTF banks who packaged all those trillions of dollars of worthless mortgage securities and derivatives that everything was kosher.

And it appears that it wasn’t and that is now coming home to roost, as evidenced by all the billions of dollars of suits that are now flying around the industry. Bank of New York isn’t exactly trumpeting their big liability and other financial risks that are clearly starting to point to it, and I think much like Lender Processing Services, which has fallen more than half since we first added it as a short to the portfolio, it’s going to be a scapegoat of the industry. So I’m adding it as a short to the portfolio today.

I’ll be looking to start with some slightly out of the money puts dated out into early next year.  I’ll have more more specifics after I pull some triggers here.

And don’t forget to meet me in at for our live chat today.  We had such a huge response and so many stocks I didn’t get to in last week’s “Stocks-only chat” that I’m going to do one more “Stocks-only chat” again today.

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