Author Topic: Stocks  (Read 1304138 times)

Offline yos9694

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Re: Stocks
« Reply #1160 on: May 16, 2015, 11:00:11 PM »
+1 although i only lost a small part since i bought at a lower price point than you, it would be worth to have a little later expiration. as you saw Fridays action would've helped the situation

Later expiration = more $$ spent on time value. Seems like a waste of money.

Offline Mordyk

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Re: Stocks
« Reply #1161 on: May 16, 2015, 11:02:36 PM »
Later expiration = a little more $$ spent on a little more time value. Seems like a waste of money.
FTFY

just a little more would help. since there were only 2 days after the conclusion of the study.
#TYH

Offline yos9694

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Re: Stocks
« Reply #1162 on: May 16, 2015, 11:09:41 PM »
Yes, I understand. But why spend money on time value at all? I simply don't think the strategy makes sense, because you are paying for something you don't want. Options have their uses, but in your case its the stock you want, so buy the stock.

Offline coralsnake

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Re: Stocks
« Reply #1163 on: May 16, 2015, 11:11:52 PM »
Yes, I understand. But why spend money on time value at all? I simply don't think the strategy makes sense, because you are paying for something you don't want. Options have their uses, but in your case its the stock you want, so buy the stock.
If you buy the stock you need more capital and have much more downside exposure.
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Offline yos9694

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Re: Stocks
« Reply #1164 on: May 16, 2015, 11:15:52 PM »
No you don't. And if you do invest this way, just know that every time you make money you could have made more money if you had invested properly, and every time you lose money you could have lost less money by investing properly.

Offline Mordyk

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Re: Stocks
« Reply #1165 on: May 17, 2015, 01:37:29 AM »
Yes, I understand. But why spend money on time value at all? I simply don't think the strategy makes sense, because you are paying for something you don't want. Options have their uses, but in your case its the stock you want, so buy the stock.
there was an expected big move in the short term. We should pay for that Because we want some time for the move to happen. And now we didnt want the stock since it is very volitile  we only wanted to take advantage of the expected move. Which we needed to pay a premium for
#TYH

Offline coralsnake

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Re: Stocks
« Reply #1166 on: May 17, 2015, 02:07:40 AM »
No you don't. And if you do invest this way, just know that every time you make money you could have made more money if you had invested properly, and every time you lose money you could have lost less money by investing properly.
Assuming your comment above was made towards my previous comment- Unless something changed recently, when you buy a stock with cash or on margin your potential loss is the entire amount of the investment because the stock can go to 0.

When buying calls your potential loss is the amount paid for those calls (as they can expire worthless) which is always less that the cost of buying the underlying stock and having that stock go to 0.

If someone is looking for a decent amount of upside on a short term play with limited risk, options are safer and less costly than buying the stock outright and/or hedging the position with options.
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Online yuneeq

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Re: Stocks
« Reply #1167 on: May 17, 2015, 02:27:07 AM »
Risk shmisk.
If you're not buying crappy stocks you're not risking everything.
Buy with a "margin of safety" as described by Benjamin Graham.

You can buy options in a terrific company and still lose the entire investment.

That won't happen to you when buying stock outright if you follow basic guidelines.
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Offline coralsnake

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Re: Stocks
« Reply #1168 on: May 17, 2015, 08:02:42 AM »
Risk shmisk.
If you're not buying crappy stocks you're not risking everything.
Buy with a "margin of safety" as described by Benjamin Graham.

You can buy options in a terrific company and still lose the entire investment.

That won't happen to you when buying stock outright if you follow basic guidelines.
You can buy stock in a "terrific" company and still lose the entire investment too.

That is a very foolish statement not supported by facts.

Ever heard of Enron, or Lehman Brothers? American Airlines went down below 15 cents. If you think it can't happen to your great stock you haven't been around long enough.
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Online yuneeq

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Re: Stocks
« Reply #1169 on: May 17, 2015, 08:32:55 AM »
You can buy stock in a "terrific" company and still lose the entire investment too.

That is a very foolish statement not supported by facts.

Ever heard of Enron, or Lehman Brothers? American Airlines went down below 15 cents. If you think it can't happen to your great stock you haven't been around long enough.

Those stocks all had major warning signs or were just not good at all.
So no idea what you're so worried about.
Again, read up about margin of safety. If a company has significant  assets that back up their market value, going bankrupt won't mean that shareholders don't get paid.

So a one in 100,000 chande of collapse of a terrible company where you still own the underlying assets vs losing your entire investment in a 50/50 chance.

Ps. I believe Lehman shareholders ended up recovering at least 40-50% of their investment.
« Last Edit: May 17, 2015, 08:38:10 AM by yuneeq »
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Offline coralsnake

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Re: Stocks
« Reply #1170 on: May 17, 2015, 08:42:07 AM »
Again, read up about margin of safety.
I own and have read the Intelligent Investor multiple times.

For a short term play while limiting downside you're still better off with options. End of story.
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Offline Ephraimh

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Re: Stocks
« Reply #1171 on: May 17, 2015, 09:54:53 AM »

Those stocks all had major warning signs or were just not good at all.
So no idea what you're so worried about.
Again, read up about margin of safety. If a company has significant  assets that back up their market value, going bankrupt won't mean that shareholders don't get paid.

So a one in 100,000 chande of collapse of a terrible company where you still own the underlying assets vs losing your entire investment in a 50/50 chance.
+1
You could invest in a solid company, if your call didn't make it through the finish line your premium is toast, whereas when buying the stock outright you just end up with a smaller profit
Ps. I believe Lehman shareholders ended up recovering at least 40-50% of their investment.
Same with American Airlines, I sat through the entire bankruptcy fiasco not selling a single share, and ended up (as did all who slept through the roller pasted) with a 200% gain when the US Air merger details were executed, nobody could've predicted it with an options call...

Online yuneeq

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Re: Stocks
« Reply #1172 on: May 17, 2015, 09:55:43 AM »
I own and have read the Intelligent Investor multiple times.

For a short term play while limiting downside you're still better off with options. End of story.

If you call plunking down money in companies that can go bankrupt in the next few days -"investing"- I hear.
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Online ckmk47

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Re: Stocks
« Reply #1173 on: May 17, 2015, 11:07:26 AM »
Later expiration = more $$ spent on time value. Seems like a waste of money.
Since I wasn't expecting to keep the option very long, I would have sold back most of the time value.
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Online ckmk47

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Re: Stocks
« Reply #1174 on: May 17, 2015, 11:58:56 AM »
yos9694
You taught me something.  Thank you.


To pass on his lesson.
Buy 100 of the stock @ 126 or so each (the price when I first wrote about it)
[The cost $12,600 - more than I care to spend on one gamble.  But you buy it on margin.  That is- you use the money of the brokerage house.  But that cost lots of money.  Not in this case, because it's for such a short time. 2-3 weeks.  At an interest of 7.5%,  each week cost less than $20.  So 3 weeks cost up to $60 per 100 stock.]
(In the same purchase transaction) Buy a put option at a strike price about $4 less than your purchase price.  That is - buy the ability to make someone else buy the stock from you for $122. This might have cost $3 per stock, which you have to buy in lots of 100 for each 'option'.
So your cost per stock is 126 + 3 =$129
If the stock goes up:
to $135, you sell the stock.  135 - 126 - 3 = $6 profit
to $128, you sell the stock.  128 - 126  - 3 = -$1 loss
etc
If the stock goes down, as it actually did:
a) It goes down below 122 - the put price:  you sell the stock for 122.   net cost: -126 - 3 + 122 = -$7 or a maximum loss of $7.
b) If it goes down to somewhere between 126 and 122:  you lose (126 - new stock price) + 3 (put premium)
But this will max out at the $7 of scenario (a).
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Offline joshnuss

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Re: Stocks
« Reply #1175 on: May 18, 2015, 10:59:08 AM »
Anybody here ever write articles for these stock sites like seeking alpha? they pay like 35 dollars per article if it gets approved and 10 dollars more per 1000 views

Offline Am

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Re: Stocks
« Reply #1176 on: June 01, 2015, 10:02:02 AM »
I have such a difficult time selling. I find it so much harder than buying

Offline jackofall

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Re: Stocks
« Reply #1177 on: June 01, 2015, 11:58:22 AM »
I have such a difficult time selling. I find it so much harder than buying
My 2 cents. In order to successfully play the market, you should have an exit strategy before closing on a position thus eliminating the need to make tough decisions on the fly.
If you focus on being a boss, you will never be a leader. Leaders lead people to growth and improvement.

Offline Mordyk

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Re: Stocks
« Reply #1178 on: June 01, 2015, 12:00:53 PM »
My 2 cents. In order to successfully play the market, you should have an exit strategy before closing on a position thus eliminating the need to make tough decisions on the fly.
every trader will agree to that. but many times you must reconsider for one reason or another. like if the news has a very strong effect and sends the stock away from the regular levels, it might be wise to reconsider the strategy
#TYH

Offline nobiggy

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Re: Stocks
« Reply #1179 on: June 01, 2015, 12:41:06 PM »
If you call plunking down money in companies that can go bankrupt in the next few days -"investing"- I hear.