Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Rain Man]

Originally Posted by Amnorix

Actually, do you mind saying which company it is?

Actually, I don't recall. It's a regional bank that she worked at, and it got bought and sold several times when she worked there. I saw the certificates briefly, but it's one of those generic bank names that no one remembers. But she said that she monitors the stock price, so presumably she's got certificates for the version of the company that's currently listed.

[Halfcan]

Originally Posted by Halfcan

Has anyone on here used the Nova X Report?

It is being pushed hard on financials websites.

Also-who is into the Medical Pot stocks. I have 4500 shares of one "company" that did not do squat. Some other stocks soared 125,000%. Curious where you think the next play is with so many states changing pot laws.

[lewdog]

I still love all of you.

I'll never stop.


xoxo
lewdog

[scho63]

Originally Posted by lewdog

Ok Scho and RubberSpong, I'll admit it, I am lost on what you're doing. I do not know relatively anything about stock trading like you're doing.

Some of my dumb questions are things such as, why did Scho put out multiple calls all at .60? What the **** does .60 even mean? Can he have set this to sell once his money doubled or does he have to check the price of the stock all day and sell once it's where he wants? What's your best chance at making even just some money instead of being greedy and risking it all?

I'll try to cover the very basics of OPTIONS trading.

http://www.investopedia.com/university/options/

An option is a CONTRACT that gives you the right to BUY (a CALL Option) or SELL (a PUT option) 100 shares of stock for a specific target price by a specific target date.
1 contract = 100 shares

The CBOE, known as the Chicago Board of Options, creates contracts for stocks that trade on both the NYSE and NASDAQ. They create MORE options and more strike prices and dates for highly traded stocks with lots of liquidity and much less for lightly traded and low cap stocks. There are no options for pink sheet or illiquid stocks.

Apple (APPL) has a TON of options and strikes and dates whereas a company like Nuance Communications (NUAN) has just a few options and dates.

So let's make a scenario:

You like Google stock but it is too expensive to buy 500 shares. So you believe that Google is going a lot higher in the next 6 months. So you decide you want to buy some options on Google to control shares.

You would then pick a price (known as the STRIKE price) and time frame (known as the EXPIRATION DATE) to decide which option to buy.

In this case you would want a CALL because you think it is going higher. If you felt Google was going to go down a lot, you would buy a PUT instead.

As of today, Google closed at $805.02
You may look at a near term option or a longer term option. The shorter the expiration, the higher the risk and lower the premium. The further out you go the greater the premium. Also, the higher the price the higher the option premium because the stock makes greater daily price moves.

Here is a list of Google options
https://finance.yahoo.com/quote/GOOG/options?p=GOOG
On the left of the page under the word CALLS, you will see a box with dates. Those are the EXPIRATION dates for options and you can change the dates to look further out. The prices all in the FIRST column are the STRIKE price. Starting at the lowest and moving up. You then have a BID and ASK just like stock.

The difference is that when we speak of .70 per contract, it means $70 to control 100 shares. If the price was $3.25, it would be $325 to control 100 shares.

Getting back to Google, if you wanted to buy a $900 STRIKE contract that expires on June 16, 2017 you would pay a price of $8.20 a contract, which equals $820. You would be nearly $100 OUT of the money because Google would need to go over $900 by expiration PLUS the $8.20 of premium you paid for a total of $108.20 move higher for Google.

So (5) contracts to control 500 shares would cost ($820 x 5) + commissions or around $4,150.

Lower price stocks and shorter expirations have much, much less premium EXCEPT when earnings are going to be released and then both the CALLS and PUTS get extra premium built in by the market.

Try reading the first link about option investing to see if you grasp the concept. There are another 50 things to learn about options including NAKED calls or PUTS, COVERED CALL writing against stock you own, and then all kinds of crazy spreads and hedges.

It is all about leverage and risk. You can't lose more than you invest just buying options BUT you can lose a fortune if you write naked options. You would not be allowed to do that at the brokerage firm with your skill level.

Hope that gives you a little start to understand.

[scho63]

One little addendum to my long post: you can SELL your option at any time before the expiration date. You do not have to hold it. If it goes up a lot in just a short time, you can get out.

[lewdog]

Thanks Scho. That makes more sense. Are you able to set a certain sell price with that option during the duration or do you have to manually sell your option.

In other news, under armour stock down 30% in 3 days. Company still has tons of international expansion IMO. Good time to buy shares for long term. Or Is there a realistic call option you'd take on a stock that recently plummeted?

[Buehler445]

Originally Posted by lewdog

Thanks Scho. That makes more sense. Are you able to set a certain sell price with that option during the duration or do you have to manually sell your option.

In other news, under armour stock down 30% in 3 days. Company still has tons of international expansion IMO. Good time to buy shares for long term. Or Is there a realistic call option you'd take on a stock that recently plummeted?

Yeah, you can put orders in on options.

[scho63]

Originally Posted by lewdog

Thanks Scho. That makes more sense. Are you able to set a certain sell price with that option during the duration or do you have to manually sell your option.

In other news, under armour stock down 30% in 3 days. Company still has tons of international expansion IMO. Good time to buy shares for long term. Or Is there a realistic call option you'd take on a stock that recently plummeted?

Yes, the CBOE allows you to set a price you want to sell it at, called a LIMIT order and if the option reaches that price and there is enough contracts on the BID side, your option(s) would be sold.

They only allow day limit orders so you would need to re-enter it everyday if it didn't sell.

Under Armour will probably still have some downgrades and selling pressure. I would not buy a short term option but maybe one a year or more out when the price drops a little more.

[lewdog]

Originally Posted by scho63

Under Armour will probably still have some downgrades and selling pressure. I would not buy a short term option but maybe one a year or more out when the price drops a little more.

I'm thinking of just putting in a straight limit order for UA stock now that it's dropped. I have been following it for a few years and I still like the direction the company is heading. Just deciding if it's a good time now after a 3 day slide or if it might go even farther down before purchasing.

[Buehler445]

Originally Posted by lewdog

I'm thinking of just putting in a straight limit order for UA stock now that it's dropped. I have been following it for a few years and I still like the direction the company is heading. Just deciding if it's a good time now after a 3 day slide or if it might go even farther down before purchasing.

Options get expensive for long terms trades. If you think it is a good buy, I'd just buy the stock. You pay for time value with options.

[scho63]

Originally Posted by Buehler445

Options get expensive for long terms trades. If you think it is a good buy, I'd just buy the stock. You pay for time value with options.

True, but it will move dollar for dollar with a long term expiration for at least the next 9 months. The $30 strike option that expires Jan 19 2018 is trading around $4.36 or $436 to control 100 shares. The stock is $18.12 after another big drop today on 4x's avg daily volume.

You get leverage of 4.5 times your money.

This is a good option to buy instead of the stock. You can put out roughly $4,500 for 10 contracts and control 1,000 shares.

Additionally you can buy 1,000 shares on margin and it would cost you about $18,200 x 30% = $5.400

[Hog's Gone Fishin]

Anybody ever get into NVDA a while back when I brought it up ? I bought it at ,I don't remember exactly, around $42 and sold it at $65 . Well now it's ****ing $110

[lewdog]

Originally Posted by Hog Farmer

Anybody ever get into NVDA a while back when I brought it up ? I bought it at ,I don't remember exactly, around $42 and sold it at $65 . Well now it's ****ing $110

You've had like 3 great calls in this thread since we started posting.

Props to you man. Keep them coming!

And actually it's $115..........

[Hog's Gone Fishin]

Today I bought 1,250,000 shares of PNOW. I take that back , actually I put in a buy order for the open tomorrow. This company has started kicking ass and is looking at monthly 100% growth for at least the next year.

[lewdog]

Originally Posted by scho63

True, but it will move dollar for dollar with a long term expiration for at least the next 9 months. The $30 strike option that expires Jan 19 2018 is trading around $4.36 or $436 to control 100 shares. The stock is $18.12 after another big drop today on 4x's avg daily volume.

You get leverage of 4.5 times your money.

This is a good option to buy instead of the stock. You can put out roughly $4,500 for 10 contracts and control 1,000 shares.

Additionally you can buy 1,000 shares on margin and it would cost you about $18,200 x 30% = $5.400

Ok so I am getting the basics here but still not understanding what a stock would have to do for me to say, double my money. How do I realistically set expectations? Let's take the $30 strike, a year from now, at $4.36 for 100 shares. What would the stock have to do for me to double my money on that?