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Discussion Starter #702
Thanks guys. I'll read on what you guys provided for F and make a decision based on that.

@S4gunn , I still don't know how to do options trading. For as much as I read on that and how you've explained it, I can't wrap my head around it. All I know is that I need enough cash in my account to cover 100 shares worth of a particular stock, so ~$780 at current F share price if I were to do it right now, but beyond that....??? I need to see it work in person for me to be able to comprehend this better.
 

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Discussion Starter #704
Out of pure principal I want the Mach E to flop hard
YYYYEEEEEESSSSSSS!!!!!!!

Like, seriously. Ford could have made updates to the existing Mustang body to allow for a battery pack and added electric motor(s) in true Mustang fashion (car, 2 doors) and called that the Mach E.

Sent from my Pixel 3 XL using Tapatalk
 

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Thanks guys. I'll read on what you guys provided for F and make a decision based on that.

@S4gunn , I still don't know how to do options trading. For as much as I read on that and how you've explained it, I can't wrap my head around it. All I know is that I need enough cash in my account to cover 100 shares worth of a particular stock, so ~$780 at current F share price if I were to do it right now, but beyond that....??? I need to see it work in person for me to be able to comprehend this better.
Options really aren't that hard. Let's try again.

Put = right to sell a stock at a given price
Call = right to buy a stock at a given price.

Cash Secured Puts
What you have outlined is what is called a cash-secured put. You sell the right to "sell 100 shares of F" at a certain price to someone else between now and the expiration date.
  • In exchange, they pay you a premium up front. You keep that money no matter what.
  • If the price stays up, you've just made a profit. If the price drops to your strike, they'll force you to buy the shares.
  • Your risk is that the price drops BELOW your strike before expiration.

In exchange, you have to have 100 x $Strike Price in case the other guy wants to force you to buy 100 shares of F. I guess you could sell a put for the current market price but more realistically, you sell the CSP for a strike somewhere lower than where it is today.

The key is to pick a strike price that is low enough that you feel you are "getting a deal" but high enough where there is a decent premium.

For the expiration date, you want to pick a date that's close enough in that your premium will give you a decent APY (calculated by seeing what the annualized yield would be on the premium for the amount of time between the opening of the contract and when it expires) BUT not too long that you get too much exposure.

How I Use this Strategy
1) I think a stock is overpriced. I'll find a strike price I want long term and sell a contract to force me to buy something I would want to own anyway. if the market goes up, I keep selling new contracts as the old one expires and collect premiums. If the stock drops to my stock price, I own something I want.

2) Getting greedier, I sold premiums on stocks at strike prices a good deal higher than I felt the shares were worth (if I felt that F was worth $7.85, I'd just buy them outright today). Some stocks like NIO, NKLA, etc have zoomed up so much that people were paying the equivalent of 30%-50% APY just to protect their own (unrealized) gains. If you owned NIO @ $3, paying someone a premium of a 50c/share to guarantee you could unload the shares at $17, for example, makes sense). I took these bets on NIO, NKLA, and WKHS. With NKLA, I was worried I was going to own a stinker so I bought BACK my contracts before expiration at a profit (meaning I paid less than I received in premium). I now feel that WKHS is questionable as well (even at a strike of $14), so to that end I'm unwinding my position early by buying BACK my contracts. This means I'm giving up some of my premium (in my case I sold at $3.11 and bought back at $2.50 just to get out of an obligation that tied up my money until Jan 15). I suspect WKHS may stumble and crash below that price. I made less money that I originally hoped (I could have kept the entire $3.11/share x 100 x # of contracts if WKHS remained above $14 until Jan 15) but since I wasn't confident of that and I think that $14 may be too high, I got out.


Covered Calls
The other easy transaction is you have 100 shares of a stock that you feel is underperforming BUT you don't want to sell it off and invest your money elsewhere.
You sell a "covered call" which says that someone can buy your shares of stock @ an agreed upon price within a certain time. Typically, you pick a strike HIGHER than the price today.
  • Let's say your stock has been kicking around the same price for a while. You could hold onto the stock, collect any dividends, and just be annoyed that its not doing anything.
  • Or, you could sell this right to buy your shares at a strike price HIGHER than the current price, collect the premium, and leave the decision to someone else.
  • If the stock price drops, you still own the shares can collect the dividends BUT you also keep the premium.
  • The "biggest" win you could get is if you set your strike price to be just a little under where the market price is at contract expiration. You've now sold the stock at a price you are happy with AND your premium received is greater than the amount "lost" in opportunity cost.
  • Your risk is that some news comes out and the stock ZOOMs way past your strike price. Let's say that you sold a call for F @ $8.50 and they magically announce dividends so the price zooms to $9.50 (I don't see that happening, BTW) so the owner of the contract calls your shares away and pays you $8.50 for it. One way to look at this is that you've lost the opportunity to sell those 100 shares for $1 more ($100 "loss"). However, the other way to look at is that you guaranteed a payout of $8.50 on a stock that you wanted to get rid of but wanted more than $7.85 for (today's price.)

How I Use This Strategy
I'm still very much bearish on the market. What remaining equity positions I own are mostly underwater BUT a) I don't need the funds to invest elsewhere and b) I don't want to "realize the loss". This is because they are all in my IRA accts so I can't exactly just dump additional cash into them whenever I want and there's no tax advantage to taking the loss.
  • I had some VWO that was almost, but not quite at my cost basis. I want to be in cash but I didn't want to realize the loss. Therefore, I sold some short term (14-28 Days to Expiration or DTE) calls at just above my cost basis. If VWO tanks, I keep the premium which I wouldn't have had if i didn't sell the call. If it goes beyond my strike, no worries, I got what I wanted (a little over my cost).
  • Im continuing to do the same with from RCL/CCL (cruise ship) and YOLO (marijuana ETF). It's not worth it for me to sell these at a loss so I will just collect premiums until they bounce back.

BUYING CALLS
  • The final basic technique I'd like to suggest is BUYING a call. In this scenario, you are betting that a certain asset will go up in price. Let's take SQQQ (an ETF which is shorting the market). Each share is $19.xx today. I bought a call today for 3/15/2021 @ $20 for $3.80. This means I spent $380 to control 100 shares of SQQQ.
  • If SQQQ's price climbs above $20 + $3.80 = $23.80/share before March 15th, I'll make $100 for every $1 SQQQ moves up.
  • If the stock price stays below $23.80, even if its above $20, I'll lose some money but my losses are capped at the cost of the option $380.
  • If I wanted to buy the shares outright, my $380 would have bought me 20 shares. In this scenario, I'll make $20 for every $1 the stock price goes up above $19 but I could also lose $20 for every $1 the stock price drops below $19/share.
  • Buying PUTS is the same idea but going the other way. If the price drops below your strike plus your premium before expiration, you'll make money.
  • With an option, time is working against the owner of the contract. Everyday, my purchased option loses a little time value (or theta). Conversely, time decay benefits sellers of contracts since the cost to buy back your contract drops every day.
  • This is why buying options ONLY makes sense if you feel that the price will make a substantial movement BEFORE your expiration date. If you aren't confident about timing even if you are confident about direction, you are better off just owning the asset.
  • SIDE NOTE: the people making crazy gains on r/wallstreetbets on reddit are buying far OTM calls/puts with very short DTE (so they are cheap -- like 5c/share or $5/contract). They are also buying a ton of them. IMO, this is highly, highly stupid because its really hard to predict share movements. Sure $500 could become $5K overnight but you can just as easily lose that $500 overnight. Most of the kids making these plays don't have enough money to "exercise" the contracts as well since they are often playing with borrowed money (buying on margin) so they also find their brokers liquidating their positions earlier than desired by selling the contracts off automatically (close to the expiration date, there are fewer buyers and sellers of options contracts so often in order to realize the profit you have to take ownership of the underlying stock instead of just selling off the contract). DONT be one of these kids.

OPTIONS CONCLUSION
Selling CSPs and Covered Calls at Strike Prices you'd be happy to own long term is a "set it and forget it" technique as it leave the decisions on whether or not you own an asset to someone else. You need to do some research up front to figure where to set your strikes and what your returns would be for given expiration dates but its easy. Once I decide on a certain price/expiration, I also like the "game" of trying to finagle the best price possible for me to buy/sell the contract. This is because unlike something like SQQQ, the bid/ask spreads can be pretty wide (can be 50c -> 75c sometimes); Unless I'm doing something like rolling a contract (which involves buying and selling a contract at the same time), I'll almost never put in a market order. if I'm selling, I try to get the closest to the ask price as possible to get executed. If I'm buying, I go closest to the bid price. I will often adjust my order depending on the bid/ask spread (IIRC, it's called "fishing" for prices).

Selling CSPs at a HIGHER that what you'd like to own long term requires more active monitoring. If you don't like where the company is going (NKLA, WKHS), you'll need to buy to close the contract early. If the price gets too close to your strike and you don't WANT the stock at the agreed upon strike price, you'll need to "roll" your contract by buying it back and then selling a new contract at a lower strike price, farther out in time, or both.

Now there are a TON of other strategies but they all involve a lot more management. They have cutsey names like butterflies, iron condors, and jade lizards or names that sound like S&M games (straddles, strangles). Most of them stem around buying one type of contract and selling another so that their premiums offset each other AND you therefore don't need as much capital to execute. however, they ALL require active monitoring as even small movements can push one or both "legs" of the strategy into losing positions and potentially unlimited loss exposure. IMO, this kind of drama isn't worth it unless you have serious TIME on your hands. I don't.


Unrelated To Options - Tax Management
Bringing up Covered Calls makes it worth discussing why you might want to sell a stock at a loss. If this was in my brokerage acct, and I had a significant gain in another stock, I could use this "loss" to offset my gains. I did THAT last year with some of my wife's GILD stock. I need a pile of cash for an investment so I liquidated several profitable positions that would have sent me a big tax bill. In order to offset those gains, I actually sold some of my wife's ESPP at a loss that I then used to offset the gain. Why? We still had/have plenty of GILD shares left and it was one way to raise the cash I needed for an investment.
 

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Check this graph of the money supply.
 

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Wow. That's what happens when you print money. Very frightening.

Found this cartoon tonight. I think this is a good place for it.

39865
 

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Well, the pfizer news is causing the market to jump a bit but IMO, this is a near-term false hope. We are still a LONG way from managing covid.

I'm not sure that this is a good time to push money back into the market and I'm holding onto my position in SQQQ -- shorting the mkt (down 11%).

At least the dollar devaluation+pfizer hopes and dreams allowed me to get out of EADSY above my cost. I don't see that one recovering for a while, either even if it benefits from currency fluctuations.

I also noticed how much RCL/CCL popped today 28% and 34% now (purely driven by hopes and dreams). THIS is the kind of volatility gamblers love but I doubt the price will go back to where I bought in until there's a recovery so I'm still bagholding.
 

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I saw that jump this morning and was wondering what your thoughts were.
 

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I saw that jump this morning and was wondering what your thoughts were.
I think that's the problem when you bet against the market. There's an inherent conflict.

Its kind of like betting on the Don't Come or Don't Pass in craps; while it's statistically better odds (I used to gamble a lot online ~20 years ago so I dug into all this stuff; it became a second job so I quit), it's objectively "no fun" if you are gambling in person and you are winning when everyone else at the table loses. People don't like that so they don't stay at the table.

Even though I think there are still a whole lot more reasons for the market to fall than rise, election unrest was only one of them. I'll admit that while part of me wanted to see this flair up (aka all the crazies taking selfies of themselves with their ARs threatening Biden supporters AND/OR LARPing in the streets would finally crawl out and start **** with the govt so they would get squished), the logical part of me recognizes that this is NOT good for society as a large.

Checking my calculations, all of my options related speculation gains (started this March) approximately offset my current unrealized loss in SQQQ so even if I cashed out today and took the loss on SQQQ, my investible net worth has never been this high. That makes no damned sense.

My plan is to hold on and we'll see if the NASDAQ100 will really go up another 15%. If so, my SQQQ bet will drop by approx half (45%) and at that point, I'll consider getting cutting my losses. I don't see that happening though. Yeah, it's a lot of $$$ to consider but as a portion of my net worth, if this investment went to near zero (which would mean the stockmarket climbs another 30% from where I bought into SQQQ), I would still retain most of our net worth (my personal cap is around 3% of our assets in any one ticker. I'm getting there with our position on SQQQ).
 

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Discussion Starter #711
I've actually been looking at PFE as the next company to buy for my portfolio for a few weeks.
 

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Whelp, the market euphoria seems shortlived.
RCL/CCL/EADSY all closed up but the broader markets didn't move that much.
DJIA and S&P500 move up a little bit but NASDAQ100 looks like it will close down today. Closed today at -5% overall vs my cost basis.
I'm glad I bought a little more on the dip :)
 

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AMZN is taking a hit today because the EU led by France and Germany are levying anti-trust charges on the company

My belief is that AMZN is worth MORE than the $1625 low they hit back in march b/c a lot of their competitors in Q1-2020 (esp retail) aren't around anymore. I also disagree that they are worth their current $3500 peak or even the $3k/share price they are trading at today.

Q: Any thoughts on whats a good price? I'm curious as to what you folks think since you folks seems more optimistic than me.

Here's my thinking: My "gut" is that even $2500 is too high (16.67% off today's price).
I checked the options and looking 60 days out, your APY equivalent @ $2500 is 7.47% ($33.75/share).
I remember looking earlier this year and 60 days out, the APY equivalent @ $2500 was more like 6%. I'm not sure this is a good enough compensation for tying up this kind of money though ($2500 x 100 = $250K). By putting the cash up, you only come out ahead if the price stays above $2500-$33.75 = $2466.
Now, imagine if you guessed wrong and the stock price plunged further below $2500. Every $10 drop would translate into $1K in loss.
Back in March, the price dropped from $2155 high in late feb to $1625 (24.5% plunge).
 

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AMZN is taking a hit today because the EU led by France and Germany are levying anti-trust charges on the company

My belief is that AMZN is worth MORE than the $1625 low they hit back in march b/c a lot of their competitors in Q1-2020 (esp retail) aren't around anymore. I also disagree that they are worth their current $3500 peak or even the $3k/share price they are trading at today.

Q: Any thoughts on whats a good price? I'm curious as to what you folks think since you folks seems more optimistic than me.

Here's my thinking: My "gut" is that even $2500 is too high (16.67% off today's price).
I checked the options and looking 60 days out, your APY equivalent @ $2500 is 7.47% ($33.75/share).
I remember looking earlier this year and 60 days out, the APY equivalent @ $2500 was more like 6%. I'm not sure this is a good enough compensation for tying up this kind of money though ($2500 x 100 = $250K). By putting the cash up, you only come out ahead if the price stays above $2500-$33.75 = $2466.
Now, imagine if you guessed wrong and the stock price plunged further below $2500. Every $10 drop would translate into $1K in loss.
Back in March, the price dropped from $2155 high in late feb to $1625 (24.5% plunge).
Sorry I missed this request. Wow, AMZN? With the pandemic raging I believe online Christmas shopping and online shopping overall will hit a record this year. Look for their Q4 earnings to be very impressive.

AMZN is rated a strong buy with a mean target of $3,821 and a high of $4,500. I don't see them dropping to or below $2,500. I'd be a buyer at that level. The support floor is at $3,004.50



I also see that there's rumor that Elon Musk has contracted COVID. Going to keep a close eye on this.
 

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I also see that there's rumor that Elon Musk has contracted COVID. Going to keep a close eye on this.
Yeah. Positive test, negative test .. Carry the zero, multiply by sin cosin tangent, divided by the square root of 2 = more money

And ... How about that S&P500 inclusion ? TSLA is up $35 in after hours trading today. 🤔
 

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Oh well, TSLA up 13.48% after hours tonight! Thirteen point four eight percent! 🤑

+$55.02 as of this post! Another great short squeeze!
 
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Discussion Starter #717
Look at you guys making money over there with your TSLA shares and speculating on buying AMZN. And here I am happy that I'm about being $0.05/share away from breaking even with my F holdings!

🤣
 

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Discussion Starter #719
Damn. I'd be mad at myself!
 

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AMZN is taking a hit today because the EU led by France and Germany are levying anti-trust charges on the company

My belief is that AMZN is worth MORE than the $1625 low they hit back in march b/c a lot of their competitors in Q1-2020 (esp retail) aren't around anymore. I also disagree that they are worth their current $3500 peak or even the $3k/share price they are trading at today.

Q: Any thoughts on what's a good price? I'm curious as to what you folks think since you folks seems more optimistic than me.

Here's my thinking: My "gut" is that even $2500 is too high (16.67% off today's price).
I checked the options and looking 60 days out, your APY equivalent @ $2500 is 7.47% ($33.75/share).
I remember looking earlier this year and 60 days out, the APY equivalent @ $2500 was more like 6%. I'm not sure this is a good enough compensation for tying up this kind of money though ($2500 x 100 = $250K). By putting the cash up, you only come out ahead if the price stays above $2500-$33.75 = $2466.
Now, imagine if you guessed wrong and the stock price plunged further below $2500. Every $10 drop would translate into $1K in loss.
Back in March, the price dropped from $2155 high in late eb to $1625 (24.5% plunge).
Was my reply above helpful? I went ahead and read the article you linked. Two things caught my eye.

1. The investigation could take years and has been going on since July of 2019. (Over a year and a half already)
2. Yeah, 37 Billion is a big scary number. However, no company EVER pays the "Maximum" allowable / potential fine. Even if they are forced to pay "Billions" it's still just a drop in the proverbial bucket. Take FB for example. They paid a record 5 Billion dollar fine. Which, in the big picture was only about a month's worth of income for them. That was back in July of 2019. With the exception of the March 2020 swoon, their stock has continued to climb.


Yes, I believe the EU anti-trust suit has merit. All of the issues raised are legitimate anti-trust issues. Will it immediately and substantially impact the stock price? A: No.

As to the drop that you mentioned back in March. That was a pandemic panic induced drop that affected every company. In hindsight it was a very rare buying opportunity. I don't see AMZN dropping like that again short of another major economic impact. Say civil war, a meteor strike, or any of the other doomsday scenarios that we've been tossing about. LOL

Anyway, if you're looking for a viable post pandemic AMZN low point to shoot for. My wildass, seat of the pants, guess for the next 90 days would be around 2,670 to 2,870. I believe the stock is currently in a consolidation pattern and will break higher not lower.

Reference:
(Pay particular attention to the comments section at the end of the article)

 
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