Off-Topic Stock Market & Crypto Discussion

[Cryptical Envelopment]

I doubt it is less risky than a diversified portfolio held over decades. Yes, you can tap dance over triple digit percentages, but as soon as you make the wrong call you are in a world of hurt.

I don't think you understand the concept of paring those options and how it de-risks you.

Let's say we both like FB stock and think its going to $160 before, say, June '21. The common is trading at $100. I think its going up. You think its going up. You buy 1000 shares at $100. You now have $100k at risk.

A bit about my strategy... (I most certainly didn't create this btw) it costs you nothing... or close to nothing, or yields an immediate profit, yet gives you free or near free calls that can make you a lot of money. How can it be risky when you are not exposing capital?

I buy $140 calls (10 contracts) for $2.50. That costs me $2,500. I SELL $70 puts (10 contracts) for $2.40. That PAYS me $2,400. What is my net cost right now? $100. If FB goes to say, $180 three months later, you make an $80,000 profit. My $100 investment would be worth approx $50,000. And I only had to "risk" $100.

The worst case scenario in our situation, is that our thesis is wrong, and the underlying stock drops. If it drops to a level between the price it was at when we executed this strategy and the strike price of the put, let's say, $80, you lose $20k and my calls expire worthless and I get to keep what I sold the put for. In other words, I lose $100. Which investment was riskier? If it really tanks to below the $70 put price, then my calls expire worthless, and I am forced to buy the underlying stock at the put price (because remember, I sold someone the right to sell me FB at $70). Which means I just bought 1000 shares of FB at $70. While you bought it at $100. Which investment was riskier?

Keep in mind that I can sell my calls and buy to cover my puts at any time along the way if I choose to and walk. As the common moves up, my calls become worth more, and I can cover the puts I shorted for less than I sold them for.

 

[Cryptical Envelopment]

No that’s fine, I understand the concept. I didn’t mean to put you on the spot asking about the specific stock.

No harm, and normally I'd happily mention it, there is just a reason I shouldn't on this one as it would be unfair to an advisor who found the spread. Apologies.

 

[The Svengali]

It is a little dangerous to "come out" as a Trump supporter. I'm old and long ago made but still I have held back at work because the establishment type, both parties, are scared, badly scared and a scared dog is dangerous. Put I have to admit that I welcome polls but never ever tell them the truth. I play their game and give misinformation by tell them I voted for Trump last time but will not this time. I am independent so they eat it up. I would not be surprised if lots of Trump supporters do the same. Why not? Trump tracts our donations and must have good idea if he has loss any votes. No one I know who voted for him has changed their minds.

 

[CFLCane]

Fair warning. Base metals are running, the DXY is sitting on an important support and looks like its going to break below. This screams that aggressive inflation is rearing its head. The FOMC meeting is today set your stops tight.

 

[Gatorhater]

Funny and lots of truth. Dave is very funny. NOBODY where I work, one of the largest tech companies in world, has forgotten that I proclaimed that Trump would win Republican nomination AND the general election at end of 2015. Maybe mistake of saying it at big group lunch. One of my mangers just told me his father-in-law died from the virus AFTER his doctor gave him that drug Trump took. I couldn't tell if he was smiling because he hated his wife's father or like that fact that he thought he finally got back at me for personally causing Trump to get elected. Mind you this is an extremely smart guy who considers us friends -- except for politics. Oh, he is life long Republican and I think we are still friends.

 

[MichiCANE]

Here's to hoping the selloff, round 2, begins today!

 

[Bird4um]

I’m getting killed

 

[CFLCane]

I’m getting killed

Tried to warn yesterday. DXY and base metals are the tea leaves.

 

[Bird4um]

Didn’t see the post.

 

[Bird4um]

**** of a call

 

[Cryptical Envelopment]

I’m getting killed

Only if you sell. You should see the options!!! Remember, in the last 3 months we've gone from all time highs to the world is collapsing to were all gonna die to an incredible rally. And now a major pull back. We still have 6.5 months left this year. Buy quality.

Amazing buying opps right now. Bought NLY at $6.45 today. I am expecting a 15-20% dividend for life, plus signficant capital appreciation. THAT is my kind of buy and hold.

 

[MichiCANE]

Only if you sell. You should see the options!!! Remember, in the last 3 months we've gone from all time highs to the world is collapsing to were all gonna die to an incredible rally. And now a major pull back. We still have 6.5 months left this year. Buy quality.

Amazing buying opps right now. Bought NLY at $6.45 today. I am expecting a 15-20% dividend for life, plus signficant capital appreciation. THAT is my kind of buy and hold.

This. You’re only truly getting killed if you sell low, it happens. My biggest regret was not putting money in on Penn when it was at $7... I had 10k ready to go and got cold feet. In 2.5 months that 10k would’ve been 60k. Praying for another opportunity

 

[HurricaneHauk]

I'm just happy I decided to sell my Jetblue and Sprit stock Monday

 

[Bird4um]

Only if you sell. You should see the options!!! Remember, in the last 3 months we've gone from all time highs to the world is collapsing to were all gonna die to an incredible rally. And now a major pull back. We still have 6.5 months left this year. Buy quality.

Amazing buying opps right now. Bought NLY at $6.45 today. I am expecting a 15-20% dividend for life, plus signficant capital appreciation. THAT is my kind of buy and hold.

I’ve owned annaly for over ten years. Sold last month. I think REITS get killed pretty soon. Gonna see lots of vacant buildings

 

[CFLCane]

**** of a call

Dxy is still hovering right above that support. Hasnt broken yet. I just heard kroger was the only positive on the S&P today due to food prices being one the few places inflation has affected consumer wise. Another inflation tea leaf.

 

[L A M P]

I'm fixing to take the plunge & get into this game. Better late than never. Sigh.

 

[Cryptical Envelopment]

I’ve owned annaly for over ten years. Sold last month. I think REITS get killed pretty soon. Gonna see lots of vacant buildings

Wow! 10 years?? Lots of DIV but tough share price right? It's a spread game. They actually guided higher than the consensus yesterday and only reduced their dividend .3 cents instead of the expected 5 cents. They said they expect EPS to exceed the DIV. They stated that they felt their DIV was sustainable, and that they bought back $100M of their shares. Your fears are valid, but built in IMO, thus why I like it at these levels.

 

[GladeCane]

I’m getting killed

When everyone is selling that's when you buy and when everyone is buying that's when you sell.

 

[GladeCane]

I don't think you understand the concept of paring those options and how it de-risks you.

Let's say we both like FB stock and think its going to $160 before, say, June '21. The common is trading at $100. I think its going up. You think its going up. You buy 1000 shares at $100. You now have $100k at risk.

A bit about my strategy... (I most certainly didn't create this btw) it costs you nothing... or close to nothing, or yields an immediate profit, yet gives you free or near free calls that can make you a lot of money. How can it be risky when you are not exposing capital?

I buy $140 calls (10 contracts) for $2.50. That costs me $2,500. I SELL $70 puts (10 contracts) for $2.40. That PAYS me $2,400. What is my net cost right now? $100. If FB goes to say, $180 three months later, you make an $80,000 profit. My $100 investment would be worth approx $50,000. And I only had to "risk" $100.

The worst case scenario in our situation, is that our thesis is wrong, and the underlying stock drops. If it drops to a level between the price it was at when we executed this strategy and the strike price of the put, let's say, $80, you lose $20k and my calls expire worthless and I get to keep what I sold the put for. In other words, I lose $100. Which investment was riskier? If it really tanks to below the $70 put price, then my calls expire worthless, and I am forced to buy the underlying stock at the put price (because remember, I sold someone the right to sell me FB at $70). Which means I just bought 1000 shares of FB at $70. While you bought it at $100. Which investment was riskier?

Keep in mind that I can sell my calls and buy to cover my puts at any time along the way if I choose to and walk. As the common moves up, my calls become worth more, and I can cover the puts I shorted for less than I sold them for.

I don't think you understand the concept of paring those options and how it de-risks you.

Let's say we both like FB stock and think its going to $160 before, say, June '21. The common is trading at $100. I think its going up. You think its going up. You buy 1000 shares at $100. You now have $100k at risk.

A bit about my strategy... (I most certainly didn't create this btw) it costs you nothing... or close to nothing, or yields an immediate profit, yet gives you free or near free calls that can make you a lot of money. How can it be risky when you are not exposing capital?

I buy $140 calls (10 contracts) for $2.50. That costs me $2,500. I SELL $70 puts (10 contracts) for $2.40. That PAYS me $2,400. What is my net cost right now? $100. If FB goes to say, $180 three months later, you make an $80,000 profit. My $100 investment would be worth approx $50,000. And I only had to "risk" $100.

The worst case scenario in our situation, is that our thesis is wrong, and the underlying stock drops. If it drops to a level between the price it was at when we executed this strategy and the strike price of the put, let's say, $80, you lose $20k and my calls expire worthless and I get to keep what I sold the put for. In other words, I lose $100. Which investment was riskier? If it really tanks to below the $70 put price, then my calls expire worthless, and I am forced to buy the underlying stock at the put price (because remember, I sold someone the right to sell me FB at $70). Which means I just bought 1000 shares of FB at $70. While you bought it at $100. Which investment was riskier?

Keep in mind that I can sell my calls and buy to cover my puts at any time along the way if I choose to and walk. As the common moves up, my calls become worth more, and I can cover the puts I shorted for less than I sold them for.

Good explanation.

 

[Cryptical Envelopment]

I’ve owned annaly for over ten years. Sold last month. I think REITS get killed pretty soon. Gonna see lots of vacant buildings

One more note... 93% of their portfolio are agency backed assets aka gov't backed.

Annaly Capital Management, Inc. Issues Letter to Shareholders

NEW YORK--(BUSINESS WIRE)-- Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”) announced today that it has issued a letter to its shareholders reiterating the strength of its financial and risk position as of March 31, 2020 during this period of volatility in the mortgage...

www.annaly.com