In a previous post, we noted that we’d seen several examples of high optimal hedging costs presaging poor performance in a stock. This is the most recent example.
Last week, we noted the high optimal hedging cost for Zynga could be a warning:
Steep hedging cost for $ZNGA (compare to last tweet re $QQQ). A red flag for Zynga longs? twitter.com/PortfolioArmor…
— Portfolio Armor (@PortfolioArmor) February 9, 2012
This was the “last tweet re $QQQ” referred to in the tweet above.
Zynga tanked almost 18% today after posting a net loss of $435 million, on a $510 million charge associated with stock-based compensation issued to its employees.