Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[ChiliConCarnage]

Originally Posted by petegz28

FIFO is not going to be part of the tax bill so no need to continue worrying about it. If it were even a chance you'd see an ass load of tax loss selling right now. Instead we are up 18 points on the SPX

The sell off happened weeks ago when the news came out. The Senate passed the bill with FIFO in it on Dec. 2nd. Look back at like Nov. 27/28 for almost any stock up huge on the year. The great semiconductors, tech, China stock recession of 2017.



This is Lam Research. Pretty much every semi.. NVDA, MU, AMAT, etc. Then anything up a ton in US Tech or China Tech

[Buehler445]

Originally Posted by ChiliConCarnage

The sell off happened weeks ago when the news came out. The Senate passed the bill with FIFO in it on Dec. 2nd. Look back at like Nov. 27/28 for almost any stock up huge on the year. The great semiconductors, tech, China stock recession of 2017.



This is Lam Research. Pretty much every semi.. NVDA, MU, AMAT, etc. Then anything up a ton in US Tech or China Tech

Interesting as shit. Thanks!

[Rain Man]

Originally Posted by Hog's Gone Fishin

Was listening to Bloomberg yesterday. They say professional stock brokers as well as amateurs are wrong 70% of the time. The difference is the pro's cut their losses quickly while most amateurs try to ride a stock until it turns around and many times they add to it to average down and just lose it all.

I'm pretty sure thats right from my own stupid shit I've done.

You just described my SSW strategy perfectly.

That's not good, though.

[Hog's Gone Fishin]

Bought INTV 2 weeks ago .Up 104% today and 126% since I bought it. Hope the guys don't short it before close today because I'm letting it ride.

GBTC
RIOT
MARA
All kicking ass today

[ChiliConCarnage]

Originally Posted by Rain Man

SSW - I've lost my shirt on this ocean freighter company, with the stock down 40 percent since I bought it. But come on - it's profitable and it pays an 8.5% dividend. I've been buying it the whole way down until I reached a limit on how much I'll put into any stock. If it comes back, it'll produce some big gains and I don't see why it's down so much. I kind of want to buy more.

Healthy companies will rarely have 8.5% dividends so that stands out right away. Unless it's something cyclical and temporary, for instance, Cal-Maine went crazy high during the avian flu thing that caused egg prices to go up. Anything much above 5ish should draw extra attention. REITs don't pay taxes and have to distribute 90+% of profits so they get big divs. The taxes are passed onto the investors because you have to pay on income instead of cap gains.

SSW has a 218% payout ratio. Just the common shares dividend seems more than income can cover. Looking at the balance sheet, they've been diluting shares which probably has caused the stock to sink.

cvgw looks nice though. Put it on my watchlist.

[Rain Man]

Originally Posted by ChiliConCarnage

Healthy companies will rarely have 8.5% dividends so that stands out right away. Unless it's something cyclical and temporary, for instance, Cal-Maine went crazy high during the avian flu thing that caused egg prices to go up. Anything much above 5ish should draw extra attention. REITs don't pay taxes and have to distribute 90+% of profits so they get big divs. The taxes are passed onto the investors because you have to pay on income instead of cap gains.

SSW has a 218% payout ratio. Just the common shares dividend seems more than income can cover. Looking at the balance sheet, they've been diluting shares which probably has caused the stock to sink.

cvgw looks nice though. Put it on my watchlist.

Yeah, I think SSW paid about 5% when I bought it, but then the stock dropped 40%, which drove the dividend yield up. I haven't heard anything about them cutting it, which would be bad, so I'm hoping that they're expecting the price to go back up. I think it cratered a couple of years ago when that Korean shipping company went belly up, and I figured that would help its price. But I guess we're embracing American steel or whatever.

CVGW has been a very nice stock for me. I find it funny that avocados are that big an industry, but hey, guacamole.

[lewdog]

Originally Posted by scho63

I bought puts as a hedge. I averaged down and the call premiums had no good value to write against the stock. Not worth it.

I've cut about $800 off my $2,000 loses so far.

Ok bud, I have covered calls down.

Now on to puts.

How did you buy a stock at $19ish and have it currently trading in the $17's but "made" money on it losing value? How do you short a stock you currently own and where does the money you make come from?

What do you mean when you say "I averaged down and the call premiums had no good value?"

Thanks for the help! I owe you a beer!

[Buehler445]

Originally Posted by lewdog

Ok bud, I have covered calls down.

Now on to puts.

How did you buy a stock at $19ish and have it currently trading in the $17's but "made" money on it losing value? How do you short a stock you currently own and where does the money you make come from?

What do you mean when you say "I averaged down and the call premiums had no good value?"

Thanks for the help! I owe you a beer!

The puts gained value as it went down. It is a separate trade from the stock.

[petegz28]

Originally Posted by lewdog

Ok bud, I have covered calls down.

Now on to puts.

How did you buy a stock at $19ish and have it currently trading in the $17's but "made" money on it losing value? How do you short a stock you currently own and where does the money you make come from?

What do you mean when you say "I averaged down and the call premiums had no good value?"

Thanks for the help! I owe you a beer!

A) You short a stock you own by selling it
B) If you want to short a stock you own without selling it then you buy puts that total more shares than you own. So if you own 500 shares and you want to short 500 shares then you need to buy 10 puts.
C) You buy a stock at 19 and then buy puts. Depending on the Puts you buy and how fast they gain in value, you could offset your 2 point loss and make more than 2 points on the Puts. That's tough going though.

There are 2 ways to use Puts effectively...

A) As a hedge on your current investment
B) To buy stock you want at a cheaper price than today's value

Warren Buffet does this a lot. If he wants to buy a stock that's at $50 but he says, I will pay $47 then he will write a ton of $47 Puts. If the stock comes down he gets it at his $47 but it may be lower by then. He doesn't care cause he thinks $47 is a price he will eventually profit from. If the stock doesn't go down or continues to go up, he pockets the premium and ladders up.

The 3rd and most unsuccessful way to make money on Puts is the same, most unsuccessful way to make money on Calls. Buy them outright and hope you're right about time and direction.

Buyers of options lose money 90% of the time. You got the guys who talk a lot on CNBC and what not about calendar spreads, credit spreads, condors, this, that and the other thing. And by the time you factor in the Bid\Ask along with commissions, you are making really dick on most of them.

[petegz28]

Originally Posted by Buehler445

The puts gained value as it went down. It is a separate trade from the stock.

Yeah but net-net you probably lost money or broke even at best. If the stock was at $19 and went to $17, assuming you bout $19 Puts, the option is worth $2 at expiration. So you broke even, even if you made a profit on the specific option trade.

[petegz28]

Options for speculation is tough sledding and I don't know anyone who consistently makes money at it unless they are very well capitalized. And those that do, profit by writing naked. They may use a spread to have something of a built in stop loss but that's about it.

If you're good at spotting points of volatility then you can make some good money on straddles and strangles if you want to buy. I have made money on those but if the market goes flat you lose big time. You also have to be quick to sell your losing position.

You're better off trading futures if you want to make money with leverage. Options buying is a fools game most of the time. Everything is against you. You have to be right about the time and the direction.

The only caveat I would say to that is, if you wanted to buy at or in the money calls, several months out in lieu of buying the stock itself.

If you don't understand the concepts of Beta, Delta, Theta and Vega then you're best off not buying options.

[lewdog]

Originally Posted by petegz28

A) You short a stock you own by selling it
B) If you want to short a stock you own without selling it then you buy puts that total more shares than you own. So if you own 500 shares and you want to short 500 shares then you need to buy 10 puts.
C) You buy a stock at 19 and then buy puts. Depending on the Puts you buy and how fast they gain in value, you could offset your 2 point loss and make more than 2 points on the Puts. That's tough going though.

There are 2 ways to use Puts effectively...

A) As a hedge on your current investment
B) To buy stock you want at a cheaper price than today's value

Warren Buffet does this a lot. If he wants to buy a stock that's at $50 but he says, I will pay $47 then he will write a ton of $47 Puts. If the stock comes down he gets it at his $47 but it may be lower by then. He doesn't care cause he thinks $47 is a price he will eventually profit from. If the stock doesn't go down or continues to go up, he pockets the premium and ladders up.

The 3rd and most unsuccessful way to make money on Puts is the same, most unsuccessful way to make money on Calls. Buy them outright and hope you're right about time and direction.

Buyers of options lose money 90% of the time. You got the guys who talk a lot on CNBC and what not about calendar spreads, credit spreads, condors, this, that and the other thing. And by the time you factor in the Bid\Ask along with commissions, you are making really dick on most of them.

This is great. Makes total sense reading this. Thank you so much.

I think Buffet's choice to sell a put on a stock you want to purchase anyway could be greatly used without having a ton of risk. Lowers your net cost of the shares as well if the purchase goes through from what I can tell? The rest of the options you mention seem pretty risky. Was reading about short selling where you in a sense borrow shares and later have to buy them back. Read some horror stories on investors losing their shirts on that!

Thanks Pete.

[lewdog]

So let's say I'd consider buying 100 shares of GE but only if it hit $15/share (currently $17.76). Instead of just writing a limit order for GE at $15 GTC, I could write a "Sell a put" option for that price, set to expire at some time in the future (is my terminology correct?). Where do you find the premiums offered for such an option?

[petegz28]

Originally Posted by lewdog

This is great. Makes total sense reading this. Thank you so much.

I think Buffet's choice to sell a put on a stock you want to purchase anyway could be greatly used without having a ton of risk. Lowers your net cost of the shares as well if the purchase goes through from what I can tell? The rest of the options you mention seem pretty risky. Was reading about short selling where you in a sense borrow shares and later have to buy them back. Read some horror stories on investors losing their shirts on that!

Thanks Pete.

Short selling stock can make you money just like buying stock. I have nothing against short selling. The rule is "Bulls make money and Bears make money but Sheep get slaughters". In a down market or if you know of a stock that is going to tank, short it, by all means.

But doing it via options is a pain because time is against you. If you just short it outright you only have to worry about a margin call but should be out long before then.

But yes, when you short a stock you are literally borrowing it from someone with the agreement to give it back at some point in the future. A lot of people had made a lot of money shorting stocks. Some do it exclusively.

Buffet does lower his cost if his options get exercised. Figure he writes 1000 Puts at a strike of $47 on a stock that is trading at $50. Say he gets $1 a contract. So if the stock drops below $47 and he has to buy, he has the gross profit of $1 a share to cushion any loss. So really he doesn't even take a loss until the stock hits $46. Anything between $46-$47 he actually walks away ahead even though the stock is below the strike price he wrote against.

A lot of big stock buyers use this strategy but it's just as effective for the little guy. As long as you are willing to live with the stock below where you bought it. Buffet is a long term player so if he gets stuck with a stock at $44 that he paid $47 for, it doesn't bother him.

[petegz28]

Originally Posted by lewdog

So let's say I'd consider buying 100 shares of GE but only if it hit $15/share (currently $17.76). Instead of just writing a limit order for GE at $15 GTC, I could write a "Sell a put" option for that price, set to expire at some time in the future (is my terminology correct?). Where do you find the premiums offered for such an option?

You don't write a "sell a put". You simply write a put.

Write = sell to open
Buy = buy to open

And what you would be doing technically is selling a naked Put. So you will have to post whatever margin requirements your broker has but yes you got the idea.

No need to sit with a limit order. Sell the put and pocket the premium while you wait to see of the stock comes to you. If it doesn't, you make your premium, rinse and repeat. If it does, you make your premium and get the stock at $15.

You find the premiums just buy looking at the options table on the stock. So if GE is at $17 and you want it at $15 you would sell a January $15 put to open.

However, this all sounds better than it is.

A) The premium you'll get will be next to nothing after commission on only 1 contract
B) a stock like GE is not volatile so the options won't be worth much

The more volatile a stock is the higher the option premiums are

Think of writing options as being "The House". You make your money little by little but consistently.