I needed the Fannie/Freddie bailout during the last week of August, not yesterday. I shorted FNM at $3.99 on 8/21 and ended up covering at $6.18 on 8/27. I shorted FRE at $2.96 on 8/21 and threw in the towel on 8/27, covering at $4.54, They both climbed higher still that week before cratering yesterday.
I knew a government bailout was coming, so why didn't I stick with the trade? It came down to money. First of all, this wasn't my money; it was my girlfriends and I wouldn't have slept well knowing that I'd lost a large chunk of her account on these two trades. Secondly, I was unwilling to sell other positions in order to meet the margin call. That was really, really stupid in retrospect, I have no idea what I was thinking. Shorting takes a different mindset, one that I'm learning to embrace, especially in this market.
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