@EwaDawg yes if you have a 100 share piece of HCH [hardcore husky stock] you can sell a covered call [you own the stock as well] and earn the premium for selling the call keeping in mind that you now have sold option rights against your long stock position.
@EwaDawg yes if you have a 100 share piece of HCH [hardcore husky stock] you can sell a covered call [you own the stock as well] and earn the premium for selling the call keeping in mind that you now have sold option rights against your long stock position.
Thanks. That would be the only way I could play in the deep end.
Automatic $675 plus a chance at a 20 % gain and I only have to risk holding HCH for 45 days.
@EwaDawg yes if you have a 100 share piece of HCH [hardcore husky stock] you can sell a covered call [you own the stock as well] and earn the premium for selling the call keeping in mind that you now have sold option rights against your long stock position.
Thanks. That would be the only way I could play in the deep end.
Automatic $675 plus a chance at a 20 % gain and I only have to risk holding HCH for 45 days.
So say I did go ahead and buy $100,000 of the the stock and the version I picked was to buy the 2X version at 13. So that means I would have purchased 7,500 shares of ERX in November of 2020. Going forward to now, the price is now sitting at 23 [a gain of +76%] and its a short term gain for tax purposes.
So say I'm now concerned about the additional risk of the stock moving back down in price to say the 16 level, and yet i still think that the upside is to 26 or 27. And I don't want to simply sell now because I think it will reach 26 or 27 and I don't want a short term gain for tax purposes as well.
So yesterday I would have been able to sell 75 calls at the 20 level for $7 giving someone else the right to buy my shares at 20 between now and the expiration of January of 2022. This now gives me downside protection to the 16 level [todays 23 stock value plus the $7 premium value] and a total sale price of 27 if they are exercised.
Perfect, exactly what I am hoping for and the exercise won't happen until after my long term holding period is achieved because the option will remain to be more valuable as an option right up until expiration because of remaining time value.
Okay. I understand the second example. I'll go back and look at the first later.
FYI, I do most of my trading in my Roth and in addition to contributions (My wife and I) I converted some IRA/401ks and paid taxes when I had less taxable income/lower tax rate. No capital vs vs short term gain concerns.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
You need to respect creepy's struggling bidness here and keep my name out of your mouth
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Yea you have posted much worse.
So you admit that you, as a conservative, lie.
You are confirming just how lacking of intelligence that you are.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Yea you have posted much worse.
So you admit that you, as a conservative, lie.
You are confirming just how lacking of intelligence that you are.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Yea you have posted much worse.
So you admit that you, as a conservative, lie.
You are confirming just how lacking of intelligence that you are.
Thanks.
You aren't ready for the deep end.
I didn't say that I was.
On another matter, please allow me to retract he second line of my last post. It doesn't fit with the unwritten rules of creepy's club.
I have been multi-tasking and forgot where I was for a moment.
But pardon me if I ignore your input on whether or not I am ready for the deep end given your propensity to make questionable statements (to which you concurred) displayed earlier in this thread.
Maybe I should have just said I've posted much worse.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
Yea you have posted much worse.
So you admit that you, as a conservative, lie.
You are confirming just how lacking of intelligence that you are.
Thanks.
Get that shit talk out of @creepycoug’s classy joint.
Options are highly useful and interesting to employ in a variety of ways and are simply an exercise in math to calculate the projected impact of. Some of the theoretical use of Options is quite simple to , other relationships are more complex but are easily understandable after you think about it. To give you the idea of how you might employ them consider the following examples...
In November 2020 I believed that Energy as a group was grossly undervalued after having gone through the floor during the downturn and was one of the few asset classes that had not rebounded so I considered the impact and attractiveness of available investment vehicles and chose to invest in Exxon the stock [XON], as well XLE the Energy ETF and also the 2X leveraged ETF ERX.
Here is the scenario I considered at the time [prices and size of investment numbers employed consider the impact of size and scale for illustration purposes]: Buy $100,000 XON Mobil Stock at 35 3/8 with a then stated dividend of 11% [would management cut the dividend as other energy co's had?] Buy $100,000 Energy ETF XLE at 35 3/4 with a dividend of around 6% [subject to change because many energy co's were cutting the dividend] Buy $100,000 Direxion 2X leveraged ETF ERX at 13.25 with a Dividend of around 4 3/4% subject to change
At the time I thought that the rebound price potential for XLE energy was 54 [+55%]+ dividend, and that Exxon might run to about the same price +55% and the dividend] and that the % return potential for the 2X was about 1.75X - 2X greater so upside to maybe the 25-28 range or about +100% return over some time period.
Here is the options kicker:
At the time, the relationship between puts and calls was favorable... option puts at the 35 level were 7-5 in favor of puts which meant that for a 100,000 investment in XLE or Exxon that you could sell 30 puts at the 35 price level [a commitment promise to buy 3000 shares at 35 if the buyer chose to sell you the shares at 35 later] and you could use the proceeds of sale of the puts to purchase 42 35 calls giving you the right to buy 4200 shares also at 35 before expiration. Options come with various expiration dates and premiums that vary accordingly. In this case the January 2023 would make the most sense to give the concept a longer period to grow into the desired outcome is what I was thinking.
The above illustrates that in that scenario your obligation is the same for selling 30 puts (the risk associated with the potential obligation to buy 100,000 XLE Energy or 100,000 Exxon stock so you need to reserve the un-invested funds to fulfill your potential obligation to purchase the shares via exercise later if the stock declines significantly below 35, which is exactly the same risk that you assume if you simply bought the 3000 shares].
The advantage offered by the above is that for the same downside risk associated with purchasing 100,000 of the energy stock you have acquired the upside potential of $140,000 worth of stock over the same period.
Consider the additional kicker later if the stock moves significantly higher during the holding period after your purchase and sale of the options...
say Exxon then moves from 35 to the 40-44 range. At that price level, the value of the options that you hold are now worth 4-5 times more than the value of the options you have sold so you can then sell lets say 25% of the call options [ 10 in this case ] to buy back the negative risk exposure of the 30 puts that you sold. This leaves you long 32 call options at an exercise price of 35 with no out of pocket cash invested and no further obligation to reserve funds for the potential obligation of purchase [you have now cloned your funds for additional investments in other areas while retaining the upside of the $100,000 investment in Energy]
Hope this helps.
Finally read it and YES it does help. I am not looking to do too much on margin (at least for a while) so maybe I'll at least see my broker about upgrading my account to include capability to play with some small dollars (hey, my wife won't miss it if its in her account).
Its weird, that USO, XLE and XOM all have risen about 37 % (according to when I bought them) and I am pretty sure that I bought them because you like the upside. Well, I think I sold the XOM and bought USO because it duplicated some of my wife's holdings.
@Another poaster for whom I formerly held a lot of respect said
"You need to respect creepy's struggling bidness here and keep my name out of your mouth"
My apologies. You are correct. Between the two threads on different boreds and sending e-mails back and forth to my actual/real (not pretend like creep) attorneys - I should have not named who actually confirmed it.
Point taken.
I have begun to not refer to trump by name. He is now known as the former POTUS twice impeached.
I should have said "another poaster for whom I formerly held a lot of respect". Or some such poorly worded dodge.
And, I have no idea how I missed your post earlier since it has your classic sig.
My cousin who is a 20 yr big tim hedge fund trader has said this book is the bible on options
*it drove me nuts reading through the first chapter ... i've never been told (except in the tug) that I'm a pea-brain, and that book made me feel like it
My cousin who is a 20 yr big tim hedge fund trader has said this book is the bible on options
*it drove me nuts reading through the first chapter ... i've never been told (except in the tug) that I'm a pea-brain, and that book made me feel like it
Option trading, especially shorting is a huge risk in that non-market or non fundamental activity can absolutely crush you, and your losses can be infinite. Look at GameStop. A bunch a internet nerds banded together to artificially inflate a stock and crippled short positions, because they could. Shorting has no cap on losses, because a stock could “go to the moon”. Call options at least limit your risk to the amount you invested. I’m completely against either, but most of the reason is that I admittedly don’t have the balls or the stomach for it.
To me shorting is also a moral issue. You are a basically betting on and hoping a company fails. I’m the type to put my money into things that I want or think will succeed.
It’s an interesting discussion but it seems too easy to lose all your money while trying to figure it out.
Hence my original response to Ewa. I know what they are; I don't know how to execute them with my own money, and I don't want to learn the hard way with options.
Comments
Certainly not relevant. Sorry.
Can the average joe sell a call or loan his shares to someone who can?
yes if you have a 100 share piece of HCH [hardcore husky stock] you can sell a covered call [you own the stock as well] and earn the premium for selling the call keeping in mind that you now have sold option rights against your long stock position.
Automatic $675 plus a chance at a 20 % gain and I only have to risk holding HCH for 45 days.
FYI, I do most of my trading in my Roth and in addition to contributions (My wife and I) I converted some IRA/401ks and paid taxes when I had less taxable income/lower tax rate. No capital vs vs short term gain concerns.
Thanks, again.
And, I could leave it there.
BTW, if you are referring to Stalin's post on the appalachian backwoods campfire (AKA tug tavern) Race has already confirmed the stupidity of the post I was referring to. Please, try to keep up.
You are confirming just how lacking of intelligence that you are.
Thanks.
On another matter, please allow me to retract he second line of my last post. It doesn't fit with the unwritten rules of creepy's club.
I have been multi-tasking and forgot where I was for a moment.
But pardon me if I ignore your input on whether or not I am ready for the deep end given your propensity to make questionable statements (to which you concurred) displayed earlier in this thread.
Resepct the business.
"Get that shit talk out of @creepycoug’s classy joint.
Resepct the business."
I retracted it. And I think I apologized.
If not, I do now.
How is your excel worksheet coming on the first option scenario coming?
We share things in the club and are greatly appreciative when others do (okay, you guys share and I appreciate it).
Please tell your pal race, I remembered the preview button.
Thanks, in advance.
Its weird, that USO, XLE and XOM all have risen about 37 % (according to when I bought them) and I am pretty sure that I bought them because you like the upside. Well, I think I sold the XOM and bought USO because it duplicated some of my wife's holdings.
Thanks again for the generous explanations.
"You need to respect creepy's struggling bidness here and keep my name out of your mouth"
My apologies. You are correct. Between the two threads on different boreds and sending e-mails back and forth to my actual/real (not pretend like creep) attorneys - I should have not named who actually confirmed it.
Point taken.
I have begun to not refer to trump by name. He is now known as the former POTUS twice impeached.
I should have said "another poaster for whom I formerly held a lot of respect". Or some such poorly worded dodge.
And, I have no idea how I missed your post earlier since it has your classic sig.
Thanks for reading. . .
*it drove me nuts reading through the first chapter ... i've never been told (except in the tug) that I'm a pea-brain, and that book made me feel like it
https://www.amazon.com/gp/product/B007VLQQU4/ref=dbs_a_def_rwt_hsch_vapi_tkin_p1_i1
My wife : WTF is a wigwam?
Me : I didn't say that out loud.
Sorry, Stalin.
Men are simple beings, indeed.