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Stock-Age: Stocks, Options and Dividends oh my!
- Thread starter koam
- Start date
koam said:
The $3.75 is the price I paid per share, per contract. Each contract represents 100 shares. So the cost was $375 per contract (not including commission).
Right now the contract has no intrinsic value because the stock price is still above the strike of $80. Which means that $3.75 is all time value which starts to erode quickly as the expiration date nears (options expire the 3rd Friday of each month).
So with these puts I have the right to sell 500 shares of RIMM at $80. So let's say the price drops to $70 on Sept 21st. I would sell my 500 shares for $40000 (500 * 80) and pocket the difference between that and the price they would be then or (500 * 70) $35000. So my profit would be (40000 - 35000) $5000.
As you can see there is quite a bit of leverage there to make big money. However there is also a substantial amount of risk involved. If by Sept 21st the stock has not dipped below my $80 strike I'm in deep and will have lost my entire investment minus whatever time value is left (which if the stock price is above $80 on the expiration date then there is no time value left).
Of course I don't have to wait until then to sell them.
In case my explanation wasn't good enough:
http://www.investopedia.com/terms/p/put.asp
koam said:
Oh I admit there is a pretty hefty premium on these puts but as long as there is some volatility in the stock the delta will remain intact and there will be a very nice time value on these puts.
If I were to wait until Sept 21st to sell these then the price would have to be below $76.25 before I would start to turn a profit. However I have no intention of doing that, I bought these for a swing trade.
I almost bought these puts yesterday but then I saw Goldman Sachs raised their price target to $95 a share (split adjusted of course) and the stock went up 5%. RIMM has been trading in a huge channel right now and while we've broken out of the top range we also have a couple gaps to fill down below (the lowest one being around $66-69).
If there's one constant in the market it's that gaps usually fill.
Cheesemeister
Member
Go, go, NTDOY! 
Ketchup Boy
Junior Member
RSTEIN said:
who do you work for?
Remember when I said the DOW might see some heavy resistance come the 13400 level. Well we're there and the now the S&P 500 is showing a 'Momentum Discrepency Reversal Down' on the RSI (not to mention the HUGE amount of puts being bought today as well as all the DITM 'down in the money' calls that were bought earlier in the week.
As always good luck and be on your toes. I don't think all this green is going to last.
As always good luck and be on your toes. I don't think all this green is going to last.
Christoff Yurievich
Member
So this seems to be a good place to ask: did anyone else get a "supplement to the offer to purchase for cash by home depot inc. of up to 250 million shares of its common stock purchase mrice no greater than $42.00 nor less than $37.00 per share" in the mail? I did and I'm having difficulties understanding what they want me to do. Am I selling my stock back to HD, or are they offering me more stock to buy? I'm a little confused.
I hated this part of my finance class so I don't remember jack.
I hated this part of my finance class so I don't remember jack.
Christoff Yurievich
Member
ah. this stock is in my IRA so I don't know if it's even possible, frankly.
Christoff Yurievich
Member
to give you an idea: I have stock in Delphi. 31 shares trading at 1.24 as of my last statement. I couldn't sell the shares when I heard what was happening to the company because it would have cost me more to sell them than I would have gained from the sale.
and I apparently only have 5 HD stock, so I wouldn't really make out if I did sell. :/
and I apparently only have 5 HD stock, so I wouldn't really make out if I did sell. :/
Cheesemeister
Member
RSTEIN said:
Hey, I can't blame you. Privacy is important, especially on the Interweb. Just last week I accidentally posted a picture of a connection speed test that revealed my employer, and I didn't catch it for 45 minutes. :lol
bune duggy said:to give you an idea: I have stock in Delphi. 31 shares trading at 1.24 as of my last statement. I couldn't sell the shares when I heard what was happening to the company because it would have cost me more to sell them than I would have gained from the sale.
and I apparently only have 5 HD stock, so I wouldn't really make out if I did sell. :/
That sounds like a good argument for using mutual funds instead of stocks for IRAs.
Christoff Yurievich
Member
SABRX / LEGG MASON FUNDS / PARTNERS EQUITY FUND CL O - 24.820 - 15.3700000 - 381.48
it's there, it's just not going very quickly. Also - I only recently became owner of my IRA as my mom ran it for me for the past 15 years. (she was under the assumption that as soon as I got it I would cash it out. apparently she was too insane to remember the penalties for early withdrawal.) Anyway, the stocks in the IRA are kind of hit and miss (YUM Brands next to ZORAN Corp for example) but I can't really do anything because my bank charges out the nose to sell any stocks and my quantities are mostly in the single digits.
I'm trying, though, to move it more towards that mutual fund.
it's there, it's just not going very quickly. Also - I only recently became owner of my IRA as my mom ran it for me for the past 15 years. (she was under the assumption that as soon as I got it I would cash it out. apparently she was too insane to remember the penalties for early withdrawal.) Anyway, the stocks in the IRA are kind of hit and miss (YUM Brands next to ZORAN Corp for example) but I can't really do anything because my bank charges out the nose to sell any stocks and my quantities are mostly in the single digits.
I'm trying, though, to move it more towards that mutual fund.
Christoff Yurievich
Member
I hope so. my situation for the past 3.5 years has been a strange one (the military is paying for me to go to school + a $750 stipend to live on + I'm 50% disabled also via the military and that gives me $850 a month and that covers my house payment so I've not been working while I go to school). Because of this, I've not been putting anything in the account really other than $50 here and $50 there. When I graduate in December, I'll have a real job and I can start approaching the maximum allowed again as I'll be making close to $45k a year.
so basically, right now IRA = but in a few months IRA =
so basically, right now IRA =
but in a few months IRA = 
xsarien said:
Is there anything I can do to prove it to you without revealing my employer?
Edit: Actually a mod could just look at my email address, go to the website in my email, and find me on our personnel page (of course without revealing my secret identity to the world).
Edit 2: Actually why the fuck do I care?
gkrykewy said:Well, you seem to have been right about the 13,400 wall. So you're saying I should NOT liquidate all of my assets and buy gold coins and Halo 3 legendary editions?
hah.. well. I wish I would have taken my own advice on that 13400. I jumped the gun a couple days before when I saw Hank Paulson come out on CNBC and basically say there's not going to be a rate cut. I thought for sure the market was going to see that, freak out, and drop then and there.
It would be hard for me to give you a suggestion on what to do with your money I don't know what your account looks like and I don't know what your goals are. I'm playing this thing with a very specific purpose in mind and i'm playing with a lot of risk.
I'm a game designer trying to start a studio
I think the market will be back up by October but, in the near term we're going to fall. Problem is I'm really not sure how hard. Not to call for doom but there are some pretty scary catalysts that could spark at any time.
- Citibank and bank of America we're given permission by the Federal Reserve to put 30% of their assets into their brokerage accounts last Friday. Prior limit was 10% which is something that was put in place to help events like 1929 from happening again.
http://money.cnn.com/2007/08/24/mag...up.fortune/index.htm?section=money_topstories
- Housing is BAD! Prices are falling, there is a 9.6 month supply for sale and the speed at which they are selling is getting worse.
http://www.cnbc.com/id/20477558
- A lot of people signed up for variable interest loans in the last couples years and those are getting set to change (I think most start early next year) and all of a sudden people are going to be paying a whole lot more than they thought they would for their houses. because the above they aren't going to be able to sell them very easy and they won't be able to re-finance either read: August 28, '07 The Market is What it is
http://trade-guild.blogspot.com/
Credit is drying up partly because the amount of people foreclosing has doubled since last year. Places like Countrywide write their loans, package them, and sell them to financial institutions all over the world. These packages are rated and then sold off. Problem is they were taking subprime loans and packing them in with AAA+ rated loans. Think of it like a hot dog. Normally pure beef (AAA+) hot dogs are supposed to be 99.2% meat. Countrywide was doing something a little closer to 85-90% meat in these packages and still calling them 'pure beef'. Now you're seeing these institutions around the world losing money because of it. I'm telling you right now, Countrywide isn't long for this world. On a different note neither is Circuit City.. (Actually, I think the safest bet in the market right now is shorting CFC and CC to Zero.)
Then you have the devaluation of the dollar and really I could go on and on. Don't think it's all bad though because it's not. Stocks are still a pretty good value and consumers are still spending but, if this housing crisis starts eating into our ability to spend look out.
There's even some tinfoil hat crap out there like someone betting many billions that the S&P 500 (which is 20% banks) is going to tank hard. They've shorted a ton of WAY in the money calls. These will only make money if the market falls and with the amount 'they' have laid down odds are 'they' know something none of us do.
Saying all that. I'd be glad give you, or anyone else, specific advice based on what you're looking to do but for the right now I think you should just hold on to what you have, provided it's a solid company with strong growth moving forward.
mrWalrus said:
Thanks. Based on all of that, why do you think the indexes will be pushing new highs at year's end? My portfolio is presently 50% cash, 25% aggressive contrarian mutual fund (JSVAX), and 25% NTDOY. I know I should diversify more, but I'm slightly in the red on both of my investments, so I'm reluctant to do any more in the current climate. My tendencies are conservative, and I'm seriously considering moving more of my assets to cash upon the next upswing, particularly some of the JSVAX.
On a related note, the extreme volatility of NTDOY on the Nikkei confuses me. The setup there basically requires a large minimum investment in the stock (something like 30-60k to my understanding), which would lend itself to institutional and large $$ investment rather than flighty individual investors like myself. Given this, why the tremendous daily volatility?
RSTEIN said:Is there anything I can do to prove it to you without revealing my employer?
Edit: Actually a mod could just look at my email address, go to the website in my email, and find me on our personnel page (of course without revealing my secret identity to the world).
Edit 2: Actually why the fuck do I care?
I'm just, you know, saying.
Taking stock tips and more-than-general advice from Internet forums is generally on a lot of "bad idea" lists.
I have a stupid question about using Morningstar.com's portfolio. In my 401k plan, I have an SSga S&P500 Index fund shown wih no ticker.
The price is about $270 per units/share. How can I get this to load correctly in Morningstar as an index fund? I can only get the individual stock price and ticker which is like $24/share (SVSPX) and the ETF (SPY) which is like $140/share.
I know it's probably something I'm unclear about but I'm quite confused lol
The price is about $270 per units/share. How can I get this to load correctly in Morningstar as an index fund? I can only get the individual stock price and ticker which is like $24/share (SVSPX) and the ETF (SPY) which is like $140/share.
I know it's probably something I'm unclear about but I'm quite confused lol
Cloudy said:
Unfortunately that's an institutional fund, so it's not publically traded. Thus, no ticker. The closest thing you can probably do is to take what the current total in the 401(k) is and divide it by however much the public fund trades for to ballpark it. They should have almost identical performance.
LTTP But I bought a little bit of CROX, and it's starting off nicely. New clothing line was shown at Magic. I predict I can get some lunch money from them until next year, maybe even next holiday.
I also picked up KFT late. Lots of management changes and product growth. Worth a patient study.
TTWO is balancing some of my mistakes, so far as well.
I also picked up KFT late. Lots of management changes and product growth. Worth a patient study.
TTWO is balancing some of my mistakes, so far as well.
Ether_Snake
å®å®å®å®å®å®å®å®å®å®å®å®å®å®å®
Ha! I got some ATVI a while ago, just before they announced a record quarter, but then all markets went down. But now it's picking up.
And I got my TTWO last Friday, so I think I bought at the right time. Hopefully the worst is over
And I got my TTWO last Friday, so I think I bought at the right time. Hopefully the worst is over
Can someone post a link or give advice to a newb interested in buying individual stocks? I've only messed with index funds in my 401k until now...
Stuff like:
What's the best/cheapest brokerage account?
Hidden fees to watch out for etc..
I'm interested in buying stocks in a company that hasn't gone public yet (sometime in 2008) and I'd like to get this all set before then..
Stuff like:
What's the best/cheapest brokerage account?
Hidden fees to watch out for etc..
I'm interested in buying stocks in a company that hasn't gone public yet (sometime in 2008) and I'd like to get this all set before then..
koam said:mrwalrus must be hiding in a corner by now. Rim is doing fantastic with no signs of slowing down.
My portfolio is dying out now, i'm just selling off everything as i wait to change brokers where i'll be paying $46 less per 2 trades.
hah.. no not really. Busy more than anything. Most on this board seem more concerned with Britney on the VMA's than stocks so...
Anyway, RIMM. Yeah that's taken a really nice turn up, I got on a little early. I got out for a slight loss before it moved aggressively higher over these last couple days. Actually. I put the position back on, this time to the tune of 25 Sept 80 puts @ a $.80 cost basis.
Take a look at the chart at this link: http://www.tickerforum.org/cgi-ticker/akcs-www?post=7704#65642
I think, am betting, RIMM that is making an 'exhaustion rally'. Meaning I would book my profits if I were long. You'll find, I'm quick to admit when I'm wrong, and I don't gloat when I'm right. I just try to do what the market tells me. using the all the tools available to make educated guesses then trading those setups, quickly retreating when I'm wrong.
BTW, I still think the market is going to take a tremendous dump.. We've priced in a cut 50 point basis point by the Fed next Tuesday but there really is no reason for the cut and if they do it the dollar is going to drop further in value and you're going to start seeing things going higher in cost.. ie. oil closed at $80 a barrel yesterday. That's just the beginning. So that means if we get less of a rate cut then that the market will sell off.
Not to sound to crazy but I am humbly suggesting that people take any winning positions they have off the table until at least next Wednesday.