Investing General Discussion

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Mist

Mist

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Lightning Lord Rule said:
Facebook's business model should be outlawed. Same with anyone else offering 'free' services where the person using them is the product.

*****

For anyone interested, what I've been doing lately is playing natural gas for swing trading. BOIL and KOLD that is. I got into boil a few months back at 55 for a small amount. I thought it was ok there since it was at 100 just before that. Unluckily, It went down to 33 from there, but I did a few more buys to get my cost/share to 41.XX. Then just a bit ago boil went up to 59. I missed that peak cause I was dumb but sold at 46 or so for some profit and then bought KOLD that same day. Now in the last week and change KOLD is up (NG price down) 60%. Wish I'd bought more :(

It looks like we're getting close to a floor on NG price again so I'm likely going to sell KOLD and then put it back into BOIL and see if I can ride another up cycle.

I'm fully willing to admit I'm just getting lucky here and this is pretty risky since the swings all seem to happen after hours and not during the day, and it often moves 7-10+%/day since these are x3 leveraged etf's.
So far so good though.
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This is basically what I was doing with ETHE all last year before I got stuck holding the bag this year. This also sounds way safer because there's definitely a real floor for fossil fuels, unlike for fake money. Also you have the ability to do this in both directions here, which definitely helps.
 
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Sanrith Descartes

Sanrith Descartes

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If, and I say If, you predict a sideways market like we are in extending itself for a year or so, another option for putting cash to work and making some alpha is a buy/write strategy.

Essentially you find a bluechip value stock with a strong balance sheet and solid/safe dividend.

You buy the stock in 100 share blocks and then turn around and sell covered calls on it.
Examples of stocks might include T, VZ, KO, CSCO, INTC etc. Somewhat lower prices shares with good dividend yields. You capture the dividend each quarter you hold it while simultaneously making option premium each month off the covered calls.

Hypothetical example.
You buy 100 shares of T at $19.
$1900 invested.
Roughly 6% dividend yield annual.
Lets say you sell covered calls and clear 9 cents a contract (which is 100 shares so 9 cents x 100) each month (not unreasonable a number). That is 0.5% return a month or 6% a year.

Over a year you make a 12% return and still own the stock. Worst case you get called on the stock and are forced to sell at a profit while keeping the dividend and premiums you already collected.

Worst/worst case is the stock goes bankrupt, but that is why you pick those type of stock who are cash cows and just spin around paying dividends while the stock price tends generally flat.
 
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Mist

Mist

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Sanrith Descartes said:
If, and I say If, you predict a sideways market like we are in extending itself for a year or so, another option for putting cash to work and making some alpha is a buy/write strategy.

Essentially you find a bluechip value stock with a strong balance sheet and solid/safe dividend.

You buy the stock in 100 share blocks and then turn around and sell covered calls on it.
Examples of stocks might include T, VZ, KO, CSCO, INTC etc. Somewhat lower prices shares with good dividend yields. You capture the dividend each quarter you hold it while simultaneously making option premium each month off the covered calls.

Hypothetical example.
You buy 100 shares of T at $19.
$1900 invested.
Roughly 6% dividend yield annual.
Lets say you sell covered calls and clear 9 cents a contract (which is 100 shares so 9 cents x 100) each month (not unreasonable a number). That is 0.5% return a month or 6% a year.

Over a year you make a 12% return and still own the stock. Worst case you get called on the stock and are forced to sell at a profit while keeping the dividend and premiums you already collected.

Worst/worst case is the stock goes bankrupt, but that is why you pick those type of stock who are cash cows and just spin around paying dividends while the stock price tends generally flat.
Click to expand...
Yeah I've been wanting to do this with INTC and CSCO, but I haven't bothered to learn how to actually do it in Fidelity. I have a ton of cash I could commit to this right now, over 100k.
 
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ToeMissile

ToeMissile

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Mist said:
Yeah I've been wanting to do this with INTC and CSCO, but I haven't bothered to learn how to actually do it in Fidelity. I have a ton of cash I could commit to this right now, over 100k.
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Me too, but I have 2 kids…. So less than 100k.
 
Sanrith Descartes

Sanrith Descartes

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Mist said:
Yeah I've been wanting to do this with INTC and CSCO, but I haven't bothered to learn how to actually do it in Fidelity. I have a ton of cash I could commit to this right now, over 100k.
Click to expand...
Functionally its very simple. The challenge is in picking the proper strike. Also I would avoid weekly expiry and stick to the monthly since more liquidity in general.

You pick the stock after you own it and go to option chain. Choose the expiry for the next month. Look at the left side of the chain which is calls. Choose a strike and look at the bid ask. If you like it then click it and choose "sell to open". Each contract qty is equal to 100 shares. If you have 500 shares its qty 5. Open the order ticket. When it executes you will be - (or short) that qty of call options. It is secured via your shares so no margin. You collect the premium immediately. Sit back and wait until expiry.
 
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Sanrith Descartes

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Does Kathy still get invited weekly to appear on CNBC?

1670522203183.png
 
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TheBeagle

TheBeagle

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Sanrith Descartes said:
If, and I say If, you predict a sideways market like we are in extending itself for a year or so, another option for putting cash to work and making some alpha is a buy/write strategy.

Essentially you find a bluechip value stock with a strong balance sheet and solid/safe dividend.

You buy the stock in 100 share blocks and then turn around and sell covered calls on it.
Examples of stocks might include T, VZ, KO, CSCO, INTC etc. Somewhat lower prices shares with good dividend yields. You capture the dividend each quarter you hold it while simultaneously making option premium each month off the covered calls.

Hypothetical example.
You buy 100 shares of T at $19.
$1900 invested.
Roughly 6% dividend yield annual.
Lets say you sell covered calls and clear 9 cents a contract (which is 100 shares so 9 cents x 100) each month (not unreasonable a number). That is 0.5% return a month or 6% a year.

Over a year you make a 12% return and still own the stock. Worst case you get called on the stock and are forced to sell at a profit while keeping the dividend and premiums you already collected.

Worst/worst case is the stock goes bankrupt, but that is why you pick those type of stock who are cash cows and just spin around paying dividends while the stock price tends generally flat.
Click to expand...
I'd like to do this with my Sunoco stocks that have been a solid dividend play in my inherited IRA that I've been using to play around with. Problem is I only have about 60 shares and the rest of the funds are tied up in shitty crypto stocks and fucking Lucid. I do have a couple grand worth of TQQQ but it's going to be underwater until the 30's which seems a LONG ways away right now. I really hate locking in all those losses but like you mentioned earlier, all those shit stocks are locked into that trough and I bought them all before they fell into that trough.
 
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Sanrith Descartes

Sanrith Descartes

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TheBeagle said:
I'd like to do this with my Sunoco stocks that have been a solid dividend play in my inherited IRA that I've been using to play around with. Problem is I only have about 60 shares and the rest of the funds are tied up in shitty crypto stocks and fucking Lucid. I do have a couple grand worth of TQQQ but it's going to be underwater until the 30's which seems a LONG ways away right now. I really hate locking in all those losses but like you mentioned earlier, all those shit stocks are locked into that trough and I bought them all before they fell into that trough.
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Probably the hardest thing for an investor is knowing when to sell a bad position. I put myself in this category. Its a multi-part analysis. Why did you buy it originally (if it is inheried this one is easy). What has fundamentally changed in the company since you liked it enough to buy it (if anything). If you do decide to sell, what option are you currently looking at that will generate alpha. Does this option present enough of a return that it will overcome locking in the loss? The last one is kind of the crux. Not only does the new option have to make you money, it has to make you money after overcoming the loss you are going to lock in.

I do this pretty much every day. I am looking at CRM right now. Aside from leadership changes being announced it really is just a victim of the overall downturn. Its last earnings report wasn't out of bounds and it beat both top and bottom. I have flipped it twice before so about half my current basis is previous profits. If I sell and lock in a loss where do I reallocate the cash. So far, the answer has been nowhere. I dont see a viable replacement so it would just be sitting in cash. Doing this removes any possible appreciation iit might grab while I wait. So I hold it for now.

The above being said, one reason I like buy/write strats on those old guard value stocks is their share price makes the investment quite small to get the 100 shares. F is another stock I had played this strat with. Being in the red on the shares changes the calculus entirely since getting assigned can be painful so it can force you into the roll game.

LCID is fucked in more ways than one. Its trying to bust up against established TSLA and the big ICE companies while simultaneously having a valuation that is a clown show. At $8.50 its market cap is $14.5b. If its share price drops to $1 its market cap is still $1.6b due to its enormous float. I think the best scenario for LCID investors is someone buying the company for its battery tech. But again that float means shareholders will end up screwed on a purchase because the company just isnt worth billions.

1670525584471.png
 
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TheBeagle

TheBeagle

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Sanrith Descartes said:
Probably the hardest thing for an investor is knowing when to sell a bad position. I put myself in this category. Its a multi-part analysis. Why did you buy it originally (if it is inheried this one is easy). What has fundamentally changed in the company since you liked it enough to buy it (if anything). If you do decide to sell, what option are you currently looking at that will generate alpha. Does this option present enough of a return that it will overcome locking in the loss? The last one is kind of the crux. Not only does the new option have to make you money, it has to make you money after overcoming the loss you are going to lock in.

I do this pretty much every day. I am looking at CRM right now. Aside from leadership changes being announced it really is just a victim of the overall downturn. Its last earnings report wasn't out of bounds and it beat both top and bottom. I have flipped it twice before so about half my current basis is previous profits. If I sell and lock in a loss where do I reallocate the cash. So far, the answer has been nowhere. I dont see a viable replacement so it would just be sitting in cash. Doing this removes any possible appreciation iit might grab while I wait. So I hold it for now.

The above being said, one reason I like buy/write strats on those old guard value stocks is their share price makes the investment quite small to get the 100 shares. F is another stock I had played this strat with. Being in the red on the shares changes the calculus entirely since getting assigned can be painful so it can force you into the roll game.

LCID is fucked in more ways than one. Its trying to bust up against established TSLA and the big ICE companies while simultaneously having a valuation that is a clown show. At $8.50 its market cap is $14.5b. If its share price drops to $1 its market cap is still $1.6b due to its enormous float. I think the best scenario for LCID investors is someone buying the company for its battery tech. But again that float means shareholders will end up screwed on a purchase because the company just isnt worth billions.

View attachment 446839
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Wish I could barf, rustled, and like this post all at once.
 
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C

Captain Suave

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Gravel said:
Not $69.420 billion? Disappointed.
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That'll be the price when Tesla buys Activision after Microsoft is denied. Then the COD engine will be integrated into Autopilot in order to complement Musk's new line of hood-mounted flamethrowers.
 
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Sanrith Descartes

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Sold my ABT position. Just above breakeven. I am probably wrong but I am seeing a decline in revenue due to Covid testing being a dying animal and the fwd looking PE being too high to justify the cash. I think over the next year its about a $85 - $90 stock. And that might be still too high. I rode it up and then rode it back down but their last earnings report has had me looking for an exit. This of course means we will get a new pandemic tomorrow and ABT will make all the new test kits.

It is my exit from the Healthcare space which is a sector I like, just don't like anything right now at an entrance price.
 
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Jysin

Jysin

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PPI report coming at 8:30 this morning. First in a wave of data that could set up some major volatility. Next week comes CPI and Fed rate hike as well.
 
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