# Groupon(GRPN)



## Fain (Oct 11, 2009)

What do you guys think of Groupon the online coupon site? it's currently just under $20/per share. It just had a recent IPO lately and i was thinking about borrowing $2,000-$3,000 and try shorting the stock.

Lemme know your thoughts!


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## zylon (Oct 27, 2010)

*GRPN - earlier discussions*

Groupon IPO
http://www.canadianmoneyforum.com/showthread.php?t=5905&highlight=Groupon(GRPN)

Groupon IPO Cancelled 
http://www.canadianmoneyforum.com/showthread.php?t=8668&highlight=Groupon(GRPN)

Google "Offers" and Groupon IPO
http://www.canadianmoneyforum.com/showthread.php?t=7069&highlight=Groupon(GRPN)


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## Addy (Mar 12, 2010)

Those posts are pretty outdated and don't answer the op's questions.

I haven't paid attention, did not even realize Groupon went forward with the IPO, I guess it wasn't overly newsworthy when it eventually happened?


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## avrex (Nov 14, 2010)

The Facebook IPO excitement seems to also have lifted the boats of other internet stocks, such as GRPN, which went up 7.4% today.

GRPN earnings are scheduled for Feb 8. 
I'm speculating and am considering a short play.


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## Toronto.gal (Jan 8, 2010)

avrex said:


> The Facebook IPO excitement seems to also have lifted the boats of other internet stocks, such as GRPN, which went up 7.4% today.


That was inevitable for stocks with FB connection as well, like ZNGA; 16.84% yesterday.

And speaking of excitement, did you guys hear/read about Facebook Riches? 

http://www.nytimes.com/2012/02/02/technology/for-founders-to-decorators-facebook-riches.html


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> That was inevitable for stocks with FB connection as well, like ZNGA; 16.84% yesterday.
> 
> And speaking of excitement, did you guys hear/read about Facebook Riches?
> 
> http://www.nytimes.com/2012/02/02/technology/for-founders-to-decorators-facebook-riches.html


Neat article. I like how the artist made so much money.

So T.Gal - how many shares do you own?


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## Toronto.gal (Jan 8, 2010)

One smart artist, wouldn't you say? Something tells me he won't quit anytime soon; people like that don't think about early retirement. 

Curiosity killed the cat FP.


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## avrex (Nov 14, 2010)

Yep, I shorted GRPN at the Friday closing bell. 
Let's see what happens with next week's earnings report.


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## humble_pie (Jun 7, 2009)

yikes. You both shorted grpn *and* you bought weekly puts the week prior to earnings ??

talk about a monodirectional bet. You sure you're not argonaut secretly signing on in avrex' account ?

ok if it works out you should move on to the next step. That'll be the four-legged stuff. Condors. Flies. Atrpdocbiz can probably help w these. The pie never does 4 legs. Just a dumb round-faced plain vanilla biscuit.


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## Argonaut (Dec 7, 2010)

You're right on the money, humble.. because I like his trade. I will probably buy some puts on Wednesday as I mentioned in the other thread. We win or lose together, avrex.


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## doctrine (Sep 30, 2011)

Good luck on the short. I suspect it will work out well for you.


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## avrex (Nov 14, 2010)

humble_pie said:


> yikes. You both shorted grpn *and* you bought weekly puts the week prior to earnings ??
> talk about a monodirectional bet.


 I guess I should clarify. 

I actually don't 'short' any stocks as I don't like idea of declaring any gains/losses as income, for taxation purposes. I only want capital gains.

Since most people on the forum don't utilize options, I often just use the term 'short' to indicate to them my monodirectional bias, towards the negative, in the underlying security. So, when I say that I have 'shorted' a security , my actual position is either a Long Put option or a Short Call option. 

In the case of GRPN, I did buy Long Puts.


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## buhhy (Nov 23, 2011)

Hmm, I think I might take a stab at GRPN puts as well  what strike and expiry are you going for?


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## avrex (Nov 14, 2010)

avrex said:


> I've done a lot of options over the last 8 months. Today (Friday), I bought my first 'weekly' option. Ya, they actually have those.
> 
> I bought 8 GRPN Feb 10th $24 Puts @ $1.55
> 
> ...


buhhy, carefully think it over. 
I do occassionally make these high risk moves. Mr. Market doesn't always agree with me. 
By the end of Wed, I may very well have lost $1,240.


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## PMREdmonton (Apr 6, 2009)

The thing that I worry about with buying GRPN puts is that so long as revenues are still growing well (and they were at the last earnings report) the market will accept mildly negative earnings so long as the degree of loss is lessening.

I do agree that in the long-run Mr. Market will crush this stock but I do not think that day is next week

I would like to see them miss once then see the stock bounce and then buy in and watch them get crushed.


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## buhhy (Nov 23, 2011)

PMREdmonton said:


> The thing that I worry about with buying GRPN puts is that so long as revenues are still growing well (and they were at the last earnings report) the market will accept mildly negative earnings so long as the degree of loss is lessening.
> 
> I do agree that in the long-run Mr. Market will crush this stock but I do not think that day is next week
> 
> I would like to see them miss once then see the stock bounce and then buy in and watch them get crushed.


Yeah, that's what will probably dissuade me from buying in. GRPN will probably do well with they can improve their margins or reduce their net loss. But if they miss, I feel they'll take a huge plunge. Definitely think GRPN is done in the long term. Too many bad things about this company.

Hmm... decisions decisions...


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## Argonaut (Dec 7, 2010)

I'm a bit gun-shy.. there's some decent news out there for Groupon ahead of earnings.

http://www.reuters.com/article/2011/12/01/us-groupon-yipit-idUSTRE7B00RM20111201

The $500-$700 I'll spend on puts is not that big of deal.. but it would adversely affect my performance numbers if I miss. I'll think about it. Leaning towards yes.


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## Argonaut (Dec 7, 2010)

I bought 3 GRPN puts and hedged it by buying 100 shares. 3:1 ratio to the downside looks good so far.


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## ddkay (Nov 20, 2010)

Buying this dip tomorrow, stocks always trade more volatile post-earnings in afterhours, I think it could shrug this off by the end of the week


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## Causalien (Apr 4, 2009)

Congrats on Avrex and Argo. I wish I have the dry powder to do this trade, but my money is tied up in some other risky trade. I am puzzled though because I don't understand why you guys didn't wait until before today's market close to buy the puts. The time decay on weeklys are extreme.


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## Argonaut (Dec 7, 2010)

I did it today, was watching the option prices all day and they didn't move nearly as much as the stock itself. No congrats are in order, looks like I won't make much if any. Was down 11% and below, now down only 5%.


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## Causalien (Apr 4, 2009)

I learned a good lesson learned on the impossibility of profit from aftermarket moves. Have to keep this in mind when I trade weekly's in the future.

I've tried weekly's before, but never made money. How do people make money with weekly's?


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## Argonaut (Dec 7, 2010)

I dunno, but I'm hoping I get lucky and Groupon opens at about $20 tomorrow. 
No real reason it shouldn't shed the gains it has made in the run-up to the quarter.


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## avrex (Nov 14, 2010)

Causalien said:


> Congrats on Avrex and Argo.


Thanks, Causalien. 



Causalien said:


> I don't understand why you guys didn't wait until before today's market close to buy the puts. The time decay on weeklys are extreme.


Ya, I know. It's expensive. The reason that I did it on Friday, is because that was my only day off work. On a normal workday, I can't find a moment to 'sneak' in a trade.


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## Causalien (Apr 4, 2009)

I just did some analysis of the volatility.

It looked like historic volatility dropped while short term implied rised by 20% from January 30 to earnings in expectation of the release. The short term says that you need a 12% drop for weekly's to make money. So anything below $22 is needed. What I am mostly surprised of, is the fact that there's almost no time decay until earnings. I guess the decay is offset by volatility buildup. 

The market makers that entered the options trade 1 hour before close, doing strangles are insured from a 24% move either way. The fact that they managed to move the option price and make it touch both the top and bottom of the bollinger band during the high volume hours is really suspicious. 

Conclusion. 5 min 20 tick SMA bollinger band is your friend in weeklys


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## avrex (Nov 14, 2010)

Argonaut said:


> I bought 3 GRPN puts and hedged it by buying 100 shares. 3:1 ratio to the downside looks good so far.


Hey Argo, I'm glad you joined me on this trade. 
I'll see tomorrow how profitable it was.


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## humble_pie (Jun 7, 2009)

yay.

groupon loss weak sales clobber shares


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## Argonaut (Dec 7, 2010)

Shares are indeed getting clobbered. Looks like it will be a good day tomorrow. What does one think I should do with my 100 shares? Sell calls on it until it disappears.. or just sell it?


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## Causalien (Apr 4, 2009)

Don't hold the stock.

Local has been tried and died so many time before that I am amazed at how much smoke and mirror gets overlooked at Groupon. Eventually it'll die for 2 reasons.

Competition and inability to scale. It is not tech because it lacks the inability to scale and it doesn't have the high margin that tech usually commands, but somehow it is currently being treated as a tech stock.

My groupon offerings for the area I am in has recently turned into a bunch of cheap hotel stays or restaurants without any flair and requires driving for a long time. Nothing that I want, which indicates that the good business are staying away.


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## humble_pie (Jun 7, 2009)

argo as i recall you hold 3 puts - ie leverage on 300 sh - so if the clobbering is good enough you should be able to sell puts & sell 100 sh & end up with a profit.

a bit like equityval with his short-trp-long-enbridge pair. The return is not as good, but the risk is so so so much less.

plus someone like yourself is no doubt able to dance in & out tomorrow ... selling P in a plunging flurry (selling them is the priority) plus selling sh on bit of an uptick.

only real drawback i can imagine is if you have to work during the day tomorrow.

in a partly worse scenario - you've sold the puts but had no chance to sell the shares at a price you like, so at the end of tomorrow you are still the proud owner - history suggests that any kneejerk fall will smooth itself somewhat in days to follow. Which means, Study tonight's grpn news release to interpret what they are really saying. What future lights are they eyeing, what solace can there be for the longs. Your takeaway from interpreting tonight's news will affect how aggressively you will be seeking to sell the 100 sh tomorrow.


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## Causalien (Apr 4, 2009)

I think the fib retracement at 50% vs market open low is a good point to sell the shares.


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## avrex (Nov 14, 2010)

Causalien said:


> I just did some analysis of the volatility.
> 
> It looked like historic volatility dropped while short term implied rised by 20% from January 30 to earnings in expectation of the release. The short term says that you need a 12% drop for weekly's to make money. So anything below $22 is needed. What I am mostly surprised of, is the fact that there's almost no time decay until earnings. I guess the decay is offset by volatility buildup.


Causalien, thanks for your analysis. 
This was my first option of the 'weekly' variety.
I guess, because it was Groupon, the volatility was huge, hence the puts that I bought on Friday were fairly expensive.

Caus, humble, 
My breakeven point at expiry for the underlying would be $22.45 (I bought 8 contracts of the $24 put at $1.55). For example, if the stock is around $21 tomorrow, my profit, after initial investment, will be somewhere around $1160. Hey, that's almost a 100% profit over my initial $1240 investment. That's excellent. Still, for the amount that Groupon has dropped tonight (14%), I was hoping the profit was a little more.

I'll need to try to logon tomorrow at work and sell this put as soon as I can, to secure my profit.

My option selections are always uni-directional. In this case, my bias for Groupon was in the downward direction, so I bought a put.

My other 'option' was to sell a bunch of call options, to also take advantage of that big volatility premium. But then I would have been at risk to unlimited losses if Groupon 'took off' with positive earnings.

In any case, I am very happy  with today's outcome.


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## buhhy (Nov 23, 2011)

buhhy said:


> Hmm, I think I might take a stab at GRPN puts as well  what strike and expiry are you going for?


Sighhhh... Why did I not do it... Avrex man, why you gotta make me doubt myself


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## Argonaut (Dec 7, 2010)

The bear side seems to be much easier to play than the bull side with quarters. I've played four, and the three winners (RIMM, NFLX, GRPN) have been puts while the loser (LULU) was calls. Is this coincidence or the way it is? Perhaps when Mark Knopfler said Money For Nothing this is what he meant.

Anyone interested in LinkedIn tomorrow?


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## avrex (Nov 14, 2010)

Argonaut said:


> Anyone interested in LinkedIn tomorrow?


haha. 
Check out the last post (on Jan 31st) on the LinkedIn (LNKD)  thread.

Of course, I'm tempted.


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## Causalien (Apr 4, 2009)

Argonaut said:


> The bear side seems to be much easier to play than the bull side with quarters. I've played four, and the three winners (RIMM, NFLX, GRPN) have been puts while the loser (LULU) was calls. Is this coincidence or the way it is? Perhaps when Mark Knopfler said Money For Nothing this is what he meant.
> 
> Anyone interested in LinkedIn tomorrow?


You bought NFLX put at earnings?


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## Argonaut (Dec 7, 2010)

Causalien said:


> You bought NFLX put at earnings?


Back in the fall when it crashed. Avoided the recent one where it had a big jump.


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## humble_pie (Jun 7, 2009)

do all remember atrpdoc's classic put squeeze in apple. As i recall he sold an atm weekly put shortly before earnings & also bought a 2-3 month otm put.

stk rose in the usual pre-earnings hype so the weekly expired without assignment & he got to keep the premium as profit.

then stk fell in the usual post earnings disappointment so his cheap otm put came into the money & he sold it for another profit.

what the pro traders never do as far as i understand - but what newbies often believe in - is to put on a long straddle just before earnings. The premiums will be so high that the probability the straddle will exceed the premiums is just about zero. As all have noted in this thread, the put premiums in grpn weeklies didn't decline as time value approached expiration. Same thing for the calls. There is usually enuf earnings hype to keep em up.

there are option traders who methodically work this phenomenon like roman soldiers. Not straddles. Not simple monodirectional bets. With 4-legged condors or flies. Not in cmf forum. Maybe find em some place like elitetrader dot com.


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## gibor365 (Apr 1, 2011)

I took a look at GRPN chart...looks like it has strong support in $20 area...


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## Causalien (Apr 4, 2009)

The market maker won't let it fall more than 24% before Friday expiration due to the strangle they employed.


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## Causalien (Apr 4, 2009)

humble_pie said:


> do all remember atrpdoc's classic put squeeze in apple. As i recall he sold an atm weekly put shortly before earnings & also bought a 2-3 month otm put.
> 
> stk rose in the usual pre-earnings hype so the weekly expired without assignment & he got to keep the premium as profit.
> 
> ...



I took 10 min and figured out what atr was doing. I think it's worth doing in hyped tech stocks when the bubble is nearing bursting... whcih won't happen until near, or after Facebook.

On elitetrader. I find that it also have a large population of inexperienced traders. The worst thing is, the newbies jump straight into these exotic strategies and just fade away after they secretly lost all their money. At least people here know when they shouldn't touch options.

*edit:

Looking into it in more detail. What I had thought at the beginning as a problem with this strategy turned out to be a non problem. I was worried that the long dated option will cost more, forcing you to have to sell more short dated option creating a inequality that can be risky. But I played around with further OTM strikes and saw that this strategy's main profit is from the short sell put. The long dated put that's bought will almost have to be dissolved right away after earnings, otherwise you are in for some trouble.

The adverse scenario would be a huge drop before earnings. In which case, the structure only protects you against a 1~2% drop. Drop before earnings is almost unheard of. 

Increasing the amount of long OTM put purchase to 5x that of short weekly ITM put will make the drop risk disappear while maintaining most of the profit. 

In all cases, I don't understand why one would keep the OTM long put until after earnings since that become a unidirectional bet.


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## humble_pie (Jun 7, 2009)

cause i think your remarks are very apropos. Yes esp one would have to sell the long put side as soon as the post-earnings plunge occurred.

believe it or not i tried discussing an identical structure with ddkay, in apple puts last fall, in the days before iphone 4S was announced. Results were hilarious, things did not go as expected although the notional spread did make money, ddkay was plugging prices into think-or-swim's trial platform.

you'll recall that the issue was would apple debut iphone 5 or just a revamped 4S. There was a fair amount of leakage that it would be 4S. We had sold a weekly put & bought another 3 months out, but the wretched share price didn't go up just before announcement (because of the leaks, i assume.) Instead share price dropped.

the weekly put fell into the money & was going to be exercised on friday. Disaster. Account would be debited $47,000. Never an option trader, ddkay didn't seem to understand about the looming assignment. So on wednesday or thursday morning here in cmf forum i had to shout & holler Buy. Back. The. Blasted. Put. ASAP. I think ddkay was sleeping in. Eventually he woke up & bought the put back by 11 am.

on the other side, the longer put we had bought increased value a bit, so in the end the pair did produce a minor gain.

all this is why i never, ever, do weeklies.

on a related issue, interesting to hear that elitetrader dot com has gone somewhat to the dogs with too many gambling newbies. I must confess i don't read there, maybe less than once a year.


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## Causalien (Apr 4, 2009)

Material Weakness = politically correct way to say Fraud.
Death knell of tech startups.
Don't say you weren't warned. Get out ASAP.


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## Dibs (May 26, 2011)

"Why Groupon is poised for collapse"

http://venturebeat.com/2012/03/31/why-groupon-is-poised-for-collapse/


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## CashMoney101 (Mar 6, 2012)

Groupon always seemed a little flakey to me just from my gut feeling about their business model. They are basically hacking value/profits out of other companies' sales in some insane rush to attract the lowest form of customer-- the disloyal, bargain hunting mob. Now sure there is something to be said for volume of sales, but in reality most of them are using a loss leader to attract customers who have almost no likelihood to be upsold or return for repeat business. They have no loyalty to the company, they only have a loyalty to the next cheap groupon deal they can get their grubby hands on. Loss leaders are fine if you are able to score actual quality customers, but using one to attract people with this kind of mentality sure seemed like a horrible idea. This has been confirmed in multiple articles I've read over the last year about business owners getting hosed through their use of Groupons to try and attract sales but wind up attracting losses and customer service nightmares instead. 

Cheers for that article, he puts the speculation aside and gets to the cold hard numbers. Especially troubling is how they are up to their eyeballs in accounting trickery which should be the only red flag an investor needs to stay the hell away from the stock.


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## doctrine (Sep 30, 2011)

The biggest crime will be in the first week of May, when the 6 month limit on selling shares by insiders expires. That will be their time to cash out big time at the expense of everyone else. Although they are now below their IPO price, it's still ridiculously valued.


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## zylon (Oct 27, 2010)

*GRPN lock-up expires June 1*



> *"Groupon CEO, founders to keep shares after lockup"*


http://ca.reuters.com/article/businessNews/idCABRE84G0TG20120517


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## Young&Ambitious (Aug 11, 2010)

This stock is diving... Predictions?


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## doctrine (Sep 30, 2011)

Zero eventually


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## Lephturn (Aug 31, 2009)

Grouponzi


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## mark.goldmanning (Jan 24, 2013)

Okay guys please explain to me why Groupon is at new highs since they fired their CEO?
It is a sign of instability and the stock price did drop from $6.00 originall to $4.50 when he was fired.
Then a few weeks later it is at new highs of $6.12.


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## kcowan (Jul 1, 2010)

As with most speculations, it is now subject to the speculation that a new CEO will perform some magic.


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