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Stock-Age: Stocks, Options and Dividends oh my!
- Thread starter koam
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RumblingRosco
Member
Ether_Snake said:
I have been wanting to get the hell out of ATVI for a while now. I keep hovering between -5% and +5%, and I'm just going to sell next time I get anywhere between 5-10% up. I have lost all faith in it.
My portfolio has gotten very diverse over the last year. At this point, I'm represented fairly evenly between most sectors, which is nice. I will be buying into WAG soon, and am strongly considering AEE or RTN, since I actually some how missed the utilities and aeronautics defense sectors. RTN is more of a gamble for me due to the supposed gradual decrease in military spending under Obama, but I'm hoping that's already factored in some what, and with an eventual reclaiming of the presidency by a Republican, am hoping for increased military spending. That's all a bit hypothetical, though.
I'm also considering some high dividend yielding mutual funds, particularly VWEHX, though VGSIX is another consideration. I've dealt with a few mutual funds in the past, going through Vanguard, and with a 0$ purchasing fee, I'm able to put in a respectable initial investment, and then average myself in with 5% of my initial investment added to the fund every month for 10 months. I did this with my first mutual fund back in August 2008... thank God I did. If I had put all my money in immediately I would have been demolished by the October 2008 sell off. As it is, it hurt a lot, but by averaging myself, I managed to weather it a lot better than had I not averaged in.
Any general thoughts on WAG, AEE, or RTN from Stock-Age? I need to do some additional research on them myself, but I always look for extra opinions.
I haven't posted in a while but I am still holding my short positions as I am up about 20% on my financial shorts of C, BAC, and WFC. I also started opening some short positions on netflix and plan on shorting more next week. That stock is bound to come back down from 132 to 115 by next week as it had a crazy run in the past couple of weeks.
deadbeef said:
There is "Outstanding Shares" and "Float".
They are both similar but Float is the amount of shares out in public available for trade.
Outstanding Shares include the float amount and also shares not available in a trade mostly owned by inside shareholders and/or employees which have to be held and are not available for trade
Ether_Snake
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Is a crash coming?
http://online.wsj.com/article/SB10001424052748703723504575425723973560744.html?mod=googlenews_wsj
We're not out of this mess by a long shot yet. Not until unemployment goes down massively, and that won't happen any time soon at all. There's a limit to how much wood the slave can burn trying to keep the house warm until the master returns.
http://online.wsj.com/article/SB10001424052748703723504575425723973560744.html?mod=googlenews_wsj
We're not out of this mess by a long shot yet. Not until unemployment goes down massively, and that won't happen any time soon at all. There's a limit to how much wood the slave can burn trying to keep the house warm until the master returns.
Ether_Snake
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THQ has gone up over 15% in two days.
Gallbaro said:
Here are my rough estimates for my 401k not counting contributions...
I only move thingsonce or twice a year at most. Unfortunately the early years also include losses where I took out a loan just prior to a market recovery.
P2002 -4.87%
2003 -50.47%
2004 83.62%
2005 18.13%
2006 26.31%
2007 7.40%
2008 -41.31%
2009 48.22%
2010 -1.23%
Ether_Snake said:
The Hindenburg Omen occurred last week.
Could be a bad sign of things to come
http://en.wikipedia.org/wiki/Hindenburg_Omen
Gallbaro said:
Typically, I have. Aside from RY, I got started trading stocks in 2003 and managed to win on several bubbles under the buy low, sell high strategy over the next 4-5 years.
Gains over 100%/year:
- Imperial Oil
- Uranium One
- American Real Estate Partners.
Gains over 20%/year:
Geopharma- Albeit in hindsight this was so risky I would probably never invest like that again.
Losses over 50%/year:
War Eagle Mining (bad call on Germanium).
Still holding and accumulating due to a share plan and dividends: Royal Bank of Canada (Book value is close to $40k with market value peaking at $120,000 when it hit $60/share). Over the 10 years it's grown about 146% although I really wasn't able to put much in until 2004 when my school fees weren't dragging my income down.
I switched over to a Royal Bank trading account this year and as of March/April I invested in the following and have (as of today and barring the inclusion of dividends):
Centerra Gold- Up 32%
Citigroup- Down 8%
Paragon Shipping- Down 20%
Sunpower B Shares- Down 7%
Lloyds Group PLC- Up 8%
Weatherford International- Up 1%
I also lost 5% on OPC, and made 6% on Hellenic Telecom so far this year as intra-year trades.
Most of what I have is weighted on Centerra Gold, Lloyds, and Weatherford.
I'm expected to hold these for a number of years unless they hit my price-target earlier.
Today was a great day for my shorts C, BAC and WFC.
NFLX had a big up day even with the down market with the short squeeze and I may look to short more shares tomorrow as tomorrow is option expiration day.
S & P seems to have great deal amount of support at about 1070-1069 but if that breaks it's going to fall a good deal.
NFLX had a big up day even with the down market with the short squeeze and I may look to short more shares tomorrow as tomorrow is option expiration day.
S & P seems to have great deal amount of support at about 1070-1069 but if that breaks it's going to fall a good deal.
Lionheart1827
Member
Alright GAF stock pros, I have another question and its probably going to sound stupid as usual.
I cannot figure out the difference between a stop limit and stop loss.
From what I'm reading on investopedia they both do the same thing, only with a stop loss it doesnt always guarantee the price. With a limit it says that you're guaranteed the price you specified, right? I know I'm missing something here because it seems as though the stop limit has all the advantages over stop loss.
This is how it seems in my brain right now:
Stop loss - I want to setup a stop loss order to sell my stock at $15, however since it may take some time for my order to execute, it may fall more in that waiting period for it to execute.
Stop limit - I want to setup a stop limit order to sell my stock at $15, I'm guaranteed the price at $15?
It just seems like there is no reason to use a stop loss when stop limit guarantees your price. But I'm pretty sure I'm missing something here.
I feel like a dumbass asking this, but thanks for helping me out. :lol
I cannot figure out the difference between a stop limit and stop loss.
From what I'm reading on investopedia they both do the same thing, only with a stop loss it doesnt always guarantee the price. With a limit it says that you're guaranteed the price you specified, right? I know I'm missing something here because it seems as though the stop limit has all the advantages over stop loss.
This is how it seems in my brain right now:
Stop loss - I want to setup a stop loss order to sell my stock at $15, however since it may take some time for my order to execute, it may fall more in that waiting period for it to execute.
Stop limit - I want to setup a stop limit order to sell my stock at $15, I'm guaranteed the price at $15?
It just seems like there is no reason to use a stop loss when stop limit guarantees your price. But I'm pretty sure I'm missing something here.
I feel like a dumbass asking this, but thanks for helping me out. :lol
Lionheart1827 said:
Stop loss - All you do is set up your stop price. When the stop price is hit, your brokerage enters a market order to sell the stock. Your order goes out on the market and you get what people are paying right now for your stock.
Stop limit - You set up a stop price and a limit price. When the stop price is hit, a limit order is issued to sell your stock no lower than the limit you set.
There are advantages and disadvantages to both. The main reason to set a stop loss is that you want to limit losses. So when the price hits a certain level, you're out. And in theory, you're out for something very close to your stop price. The danger is that you get whatever people are paying for it. If the stock has a very fast-moving price or if it's an illiquid asset like options, the price you get could potentially be quite different from your stop price.
To avoid that danger, you can use a limit order, which will specify the price you're willing to accept. Much safer on that front, but there's risk. What if no one wants to pay your limit price? Then you could get stuck holding the asset as the price plummets, which pretty much defeats the purpose of the stop order in the first place.
So basically you just have to weigh your options and tolerance for losses. Typically I'll set a stop limit order with the limit a step or two down from the stop.
Lionheart1827
Member
kathode said:
Oh, wow that makes so much more sense now. Thanks so much.
I'm getting my feet wet with stocks; I should have everything ready to go by the end of the week. My only previous experience was telling my mom to buy stock in Nintendo right before the Wii came out, which was a wise choice indeed.
That Hindenburg Omen stuff is scary though. I hope this isn't bad timing!
edit What's a good site for paper trading? That would probably be a wise idea...
That Hindenburg Omen stuff is scary though. I hope this isn't bad timing!
edit What's a good site for paper trading? That would probably be a wise idea...
vpance
Member
It's a shitty time for getting into stocks right now. Well, most common blue chip equity type stocks at least. It's doubtful we've seen the lows of this year or won't at least test them again sometime in the next few weeks. Seasonally it's not such a good time of year to buy in anyways. Sell in May and go away this year was to be followed. Might as well wait it out til at least October to bypass all this uncertainty and volatility.
One was triggered on Thursday and Friday so there were 2 confirmations now.Fatghost said:
But the likelihood of a crash does not go up with multiple confirmations. You only need first one and then a second confirmation to set off a warning and any more does not increase a chance of a crash happening.
Market is down a good amount today. This is after a good bounce back after a sudden drop when the awful existing home sales number came out. DOW seems to have strong support at about 10000 level so we will see if that holds throughout today. All my financial puts are doing really well as expected and plan on taking some profits off the table once S&P reaches about 1020 level.
kathode said:
Turned out that yesterday was a suckers rally.
Tomorrow is a big day as the GDP revisions come out tomorrow and FED are meeting at Jackson Hole. Short term support level is 1040 but I really expect that to break tomorrow once the GDP revision shows increased likelihood of a double dip. Also next week starts with bunch of important economy numbers come out throughout the week. But I would really start worrying about positions once all the traders come back after the labor day weekend and the volume really picks up.
I really don't worry about day to day price movements. One day the news says the markets rallied because of great economic data and renewed hopes of a recovery. Then the next day, fears of a double-dip and the markets turn downward. It's all bullshit. Just buy good stocks and/or index for the long term and you'll be fine.
I haven't bought anything in the last two months. Still up overall though. Again, BIV has been one of my best performers, trading at and around it's 52-week high.
I haven't bought anything in the last two months. Still up overall though. Again, BIV has been one of my best performers, trading at and around it's 52-week high.
Ether_Snake
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HOW DO I INVEST IN CANNED GOODS?
THIS IS IMPORTANT! PLEASE, HALP!
THIS IS IMPORTANT! PLEASE, HALP!
tarius1210 said:
We're pretty restricted on what funds we have access to in my 401k. I just move between an S&P500 index fund (in) and a money market (out). I'm out right now.
I just watch 13 day and 50 day EMAs and go in or out when they cross. Simple, doesn't make a killing, but it's low risk and every little bit I make is a day less that I have to work. Contributions (and employer match) still go to the index fund so dollar cost averaging and all that stuff too.
Side note, since I'm out and the S&P500 EMAs are headed down, down, down I actually chose to take a 401k loan instead of tapping cash savings for some recent home repair. Took me a while to reconcile it, but in the end I couldn't find a reason not to. Yeah, the 5% interest I'll pay myself is paid with after tax dollars and I'll pay taxes again on that when I'm retired and drawing from it, but it's a whopping $100 :lol
S&P support seems solid at 1040. It again hit it today and bounced for the third time in a week. Tomorrow's ISM number tomorrow and the employment number on Friday should dictate where the market goes from here. If the market falls through the 1040 support it's a good sign to sell off in the short term.
My short puts took me on a ride for the past week, but now they're making me money again. I have Nokia and GE this month. So far, my approach of writing short puts each month for the following month has returned 7% in my IRA account since May. The DOW is up about 2% in that same period. Makes me want to open a margin account and have some fun!
Ether_Snake
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TTWO up 12% in AH after posting profits and raised outllok. Nice!
I'm going to make my first foray into naked puts. It looks like my margin account allows for roughly 10x leverage, but I don't know if I want to go that crazy, especially since we've been in a mini bull run. I definitely want to try something though, probably way out of the money so I won't get screwed as easily.
Spoke with someone at E*Trade and cleared up my confusion. I had in the money and out of the money turned around, since they're actually reversed for short positions. So let's say I'm looking at going short a SPY Dec '12 105 put. The premium is 15.10, and current price of SPY is $112. The maintenance requirement is:
- Broad-Based Index Options:
Proceeds of the sales plus 15% of the index value less out of the money amount OR
proceeds of sales plus 10% of the strike price, whichever is greater
Let's take condition b) first. The proceeds are $1510, and 10% of the strike is $1050, so I have to keep a minimum of $2560 in the account to meet this requirement at all times.
Then condition a). The proceeds are $1510, and the remaining $2000 has to cover 15% of the value of 100 shares of SPY, minus how much higher it is than 105. So in theory, the point at which I hit a margin call can be calculated thus:
(p = premiums, x = share price)
2000+p > p+(.15*100*x)-100(105-x)
2000 > 15x-10500+100x
12500 > 115x
108.69 > x
Yeah, that's cutting it pretty close. If it goes under $108.69, I have a margin call. That's only about a 3% drop.
- Broad-Based Index Options:
Proceeds of the sales plus 15% of the index value less out of the money amount OR
proceeds of sales plus 10% of the strike price, whichever is greater
Let's take condition b) first. The proceeds are $1510, and 10% of the strike is $1050, so I have to keep a minimum of $2560 in the account to meet this requirement at all times.
Then condition a). The proceeds are $1510, and the remaining $2000 has to cover 15% of the value of 100 shares of SPY, minus how much higher it is than 105. So in theory, the point at which I hit a margin call can be calculated thus:
(p = premiums, x = share price)
2000+p > p+(.15*100*x)-100(105-x)
2000 > 15x-10500+100x
12500 > 115x
108.69 > x
Yeah, that's cutting it pretty close. If it goes under $108.69, I have a margin call. That's only about a 3% drop.
misterchef
Neo Member
Tarazet said:
Of course you're not going to get anything near 40% in two years with less risk, especially when the 2 year is floating between .5-.6%. Also, the way you're using margin is for the long term (bad b/c of interest rate risk), and you're letting the market determine your entry and exit points (either through a margin call or at expiration), which I would say is also bad.
Selling a naked put is equivalent to selling a covered call with the hope that it gets called away at expiration. I'd rather use a covered call because, even though the end result is empirically the same (less commissions), I'd feel better having a stock that is worth less, than just having cash.
If you still want to do something like this, try going long 500 C, and short 5 Jan '11 4.00 Calls.
Cost (less commissions)
=500($4/share) - 5($35/contract)
=$1825
If Citi is >$4 at January expiration, you will receive $2000 at expiration for the shares.
Profit = 2000/1825 ~ 9.6%
Even if the price of C drops to $3.80, you can short your shares after expiration and still end up with a (380*5)/1825 ~4.1% return
It's approximately 4 months until January expiration -> this plays out to almost 30% a year (ideally).
You will NOT get 30% a year from this strategy. You might for 1, 2, even 5 years. But eventually you'll blow up or just end up with marginal returns. However, for a small entry strategy into options, I'd say this is a relatively safe bet.
However, there are risks, but as long as you're ok with having C at $3.65/share then this strategy is fine for you. You're basically hoping that the economy will be doing marginally well so you don't lose from any possible upside gains, and that the selling pressure from the treasury won't depress the share price.
I would write some more, but I think you get the gist of this basic strategy.
The point about letting the market determine entry/exit points is not entirely true. If I take a very long term, then I can buy to close at any time that I'm ahead. And with over 2 years to expiration, that's a pretty large window of opportunity.
Theoretically, if I write the options at a low enough strike, then I can make the possibility of a margin call extremely remote, and the possibility of making money almost 100%, even if I'm unlucky enough to do it at the absolute peak of the market. Time will take care of the time premium and ultimately I'll have a healthy return.
The margin interest rate is something I didn't consider. Do I have to borrow money on margin even if it's just being used as the "security" for the put position?
Theoretically, if I write the options at a low enough strike, then I can make the possibility of a margin call extremely remote, and the possibility of making money almost 100%, even if I'm unlucky enough to do it at the absolute peak of the market. Time will take care of the time premium and ultimately I'll have a healthy return.
The margin interest rate is something I didn't consider. Do I have to borrow money on margin even if it's just being used as the "security" for the put position?
Ether_Snake
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CAE is back over 10$ US now, nice
Ether_Snake
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THQI shares have been going up like crazy. 8% alone today.
Amused_To_Death
Member
Ether_Snake said:
They'll be bought out before year's end, probably UBI....
Ether_Snake
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I don't think so. Ubisoft is not in a position to buy another publisher really, and Ubisoft shares have been way too low for shareholders to accept such a move. A merger maybe, but I see absolutely no reason for Ubisoft to merge with THQ.
I think at this point, neither ERTS, ATVI, TTWO, THQI, or UBI will be bought by anyone unless it's by a company that is outside the game industry.
BTW Tarazet (or anyone else): I got some stock-options where I work at. What do you recommend for me to do with them? The shares are very low right now and I think that long-term (over two or three years) they could appreciate decently. I can only exercise 25% of them a year starting a year from now.
How should I play this? I'm guessing the idea is to exercise and cash them when I think the shares are high? And what is the point of exercising but not cashing them?
Thanks for the info.
I think at this point, neither ERTS, ATVI, TTWO, THQI, or UBI will be bought by anyone unless it's by a company that is outside the game industry.
BTW Tarazet (or anyone else): I got some stock-options where I work at. What do you recommend for me to do with them? The shares are very low right now and I think that long-term (over two or three years) they could appreciate decently. I can only exercise 25% of them a year starting a year from now.
How should I play this? I'm guessing the idea is to exercise and cash them when I think the shares are high? And what is the point of exercising but not cashing them?
Thanks for the info.