flipped some $spx feb 1260 puts today for 30% gain.

1/7/2011 4:29:54 PM

Blind squirrel, nuts, etc.

[Edited on January 7, 2011 at 4:46 PM. Reason : Burnett seems like she'd be a real corpse in bed]

1/7/2011 4:45:51 PM

Quote :

"When Citibank hits $5, I feel it will propel forward. It becomes open to lots of mutual funds, pensions, institutions that have a minimum share requirement of $5. Why they haven't done a reverse stock split like AIG, I'm not sure. But check out AIGs chart, I heard hedge funds were buying it like crazy after the gov't backed it all up and the reverse stock split took effect. Personally, I wouldn't take it off the table - but I probably wouldn't take anything off the table. It seems that any decent stock is poised for a jump. You could keep the C stock, and margin it to buy something else? Put a limit order at maybe $4.80 for extra safety?"

what is this margin thing you are talking about. i am a dummie. i just buy cheaper than i sell.

1/7/2011 8:23:15 PM

My guess is he is using the C as collateral for margin to trade something else (basically a loan your broker can revoke any time they see fit). I have no idea if my online broker (Thinkorswim) will even allow this but I imagine some other more traditional houses will do it.

1/8/2011 9:37:52 AM

Anyone else own or following F?

I'm up 70% on it since buying a year ago. I'm getting to that point where I'm feeling like something bad has to happen because i've never made that kind of return on a single stock that i've had more than a handful of shares in (3000).

All the news I am reading tells me that it should continue to run up for a while.

But some part of me is like, sell sell sell, quite while you're ahead!!!

I'm thinking if i get to the point of 100% return, selling half of it.

Then i'm thinking, what if it keeps on running and I have a potential multibagger on my hands? I mean, for the first time in my life, they're making cars that people want, and not cars that people settle for, or cars that you get stuck with when you have to rent one. For the most part, they're as reliable as toyota and honda. They never took any TARP money, and all indications are that they're in really good financial shape. GM and Chrysler are still making piles of hideous shit with only a couple of exceptions.

1/8/2011 10:38:44 AM

Quote :

"and all indications are that they're in really good financial shape. "

Is this the case? I remember back when people were talking about how F didn't take bailout money or go through a bankruptcy they'd be at a disadvantage because of a huge long term debt load and union terms not as favorable as GM and C have. But I didn't study F so I may be way off here.

If you're more worried about waking up one morning and finding they've missed expectation and instead of up 70% you're only up 50%, you can always put on some type of option play to limit your risk. I'm thinking of selling a January 2012 22.50C, buying a January 17.50P, and selling an January 15P PUT. You could put this trade on for -30c (credit to you), you still have another 20% upside left, and if the stock hit some short term bumps you'd get the protection to the downside and if it really took a hit you'd just be obligated to buy back in at 15 where it would most certainly still be a good value. If the stock stays range bound you profit from time decay. If you want less protection but more exposure to more upside then buy a 25C and your total cost on this trade is a whopping 50c.

I think I just described to you an iron condor.

1/8/2011 11:37:35 AM

Quite a bit out there about Fords debt problems

http://www.autoblog.com/2010/12/31/fords-big-goal-in-2011-get-out-of-junk-status-lower-loan-rate/1

And here was another

http://michiganmessenger.com/37255/fords-debt-problem

Basically, they paid a quarters worth of profit just in interest on the debt in 2009.

I like F but I don't know if I like them at this level.

1/8/2011 7:05:45 PM

hey you stock market gurus, I just rolled over my 401k from my previous job into a traditional IRA (at Vanguard) and am looking into a mutual fund group to throw my money into. I'm 29 so I'm obviously going to stick with the high risk funds, but some of the core funds that I'm looking at are completely invested in the US stock market. I'm still weary of the US market since theres a lot of talk about a double dip recession - should I try to go with a less risky mutual fund that is 50/50 stocks and bonds?


I'm not allowed to join my new jobs 401k policy until the middle to end of the year, but I'm thinking that if things go well in my IRA, I might just let that account continue and start from zero in my employer plan. But, the more I think about it that might be a bad idea since the more money I have invested in one place, the more interest it will gain. On the other hand, I will be guarded against a complete loss should something happen to my investments in one account. Anyone have any thoughts about that aspect? Should I just keep all of my money together in one account, or have my own traditional IRA along with my employer 401k?

1/8/2011 8:09:33 PM

Don't roll your ira into your new 401K. Your new 401K may have crappy choices and then you are stuck. Just leave it in Vanguard. If you don't want to invest 100% in US stocks that's fine, but invest in international equities not bonds. Stick with a 90-10 stock/bond mix at most if not 100% stocks.

Quote :

"the more money I have invested in one place, the more interest it will gain"

10K invested in two separate accounts will return the same as 20K in one account

Quote :

"I will be guarded against a complete loss should something happen to my investments in one account."

If you are invested in the same thing, you'll see a loss in both accounts. Keep in mind you can invest in multiple funds in each individual account.

Also, depending on your tax bracket you may want to consider transferring the traditional IRA to a roth IRA.

1/8/2011 8:33:17 PM

which would you recommend - the traditional or roth? I know that I can write off the contributions I make to a traditional every year. While the roth allows me to get all of my money tax free once I retire.

I dont make more than $95,000 a year, so I am eligible for both. I always thought the traditional was the way to go since its most similar to the 401k I am used to dealing with. But I am an investment novice, so I could be way off base

1/8/2011 9:19:29 PM

I assume I'll currently be in a higher tax bracket when I retire so I prefer roth so I pay taxes now at a lower rate. At the very lest you want to be diversified i.e. have some pretax investments and some post tax investments.

1/8/2011 9:23:43 PM

good points

I guess I'll do a little more research on Roths and maybe throw a couple thousand into one. I dont know if I want to deal with having a tradition ira, a roth and a 401k account through my employers. I need a damn financial advisor between this stuff and my tax thread questions

1/9/2011 10:51:59 AM

nah, don't make it out to be harder than it is. you can make personal finance complicated if you want to (day trading, options trading, etc), but it definitely doesn't need to be.

a Roth IRA is basically a bet that you'll be making more in a few decades than you do now. Probably a pretty good bet for most of us.

You don't want to go heavy into bonds...not at 29, and especially not in a recovering stock market. The fear of a double-dip has greatly subsided, and if if we do have a significant pullback, it's not a big deal if you're doing this with a long-term outlook (i.e., for retirement).


Basically, here's what you want to do:

-1. Pay off high interest debt (I'd say anything above, say, 8%)
0. Emergency fund of a few months' expenses
1. 401k to the extent that your employer matches.
2. Max out Roth IRA
3. Contribute more to 401k, or invest in a regular (not tax-advantaged) brokerage account...depending on your goals/timeline.

1/9/2011 11:05:12 AM

Quote :

"I dont know if I want to deal with having a tradition ira, a roth and a 401k account through my employers."

Haha. That's nothing I have 7 different investment accounts, but mint.com makes it easy to keep track of things.

1/9/2011 3:36:21 PM

Lol nice, I might fire up my old mint account now that you mention it

1/9/2011 4:36:00 PM

yeah, I have:

-checking account
-money market account
-Roth IRA
-brokerage account (for retirement savings)
-brokerage account (hookers & blow)

The first 3 are with USAA; the brokerage accounts are with Scottrade. Having them all on just 2 websites makes it really easy to keep track of everything.

1/9/2011 6:55:23 PM

picked up some $STRA calls today. hoping the selloff is way overdone for them.

[Edited on January 10, 2011 at 10:02 AM. Reason : jan 120]

1/10/2011 10:02:10 AM

Hoping the M & A today isn't indicative of the rest of the years action.
No premiums would stink for trading.

1/10/2011 12:54:56 PM

glad i hung onto my Duke power stock for 8 years now.

1/10/2011 2:17:52 PM

about the ford discussions earlier...

definitely monetize some of your stock if you've had it for a while. the debt is one thing, but that's largely been priced in - as a matter of fact, that very debt facility allowed them to stay afloat & not require bailout money.

i would take profits on behavioral reasons -- GM stock from IPO until the lockout period ends will take up enough mental bandwidth among fund managers to draw new money away from Ford.

1/10/2011 2:41:42 PM

^^ I was long PGN over the weekend. Disappointment.

1/10/2011 8:12:15 PM

sold my $STRA calls today. wound up +25% on the trade.

[Edited on January 12, 2011 at 11:55 AM. Reason : and now they're up almost double! ]

[Edited on January 12, 2011 at 12:00 PM. Reason : .]

1/12/2011 11:41:17 AM

picked up some $iwm mar 78 puts for when the market decides to correct.

1/12/2011 12:22:26 PM

Do you guys know of any time table for announcement of CSCO dividends?

Milkboner in the house.

1/12/2011 12:56:15 PM

^^ i'm too scared/amateurish for puts and shorts. i just wait for the pull backs and go long with stocks, calls, and leaps

1/12/2011 1:34:19 PM

^i like to play stocks up and down. i think we're going to start seeing some weakness in the market over the next couple of months and at least one pullback (5% - 8%), so i figure i'll pick up some longer-dated puts with some capital and reserve the rest for day trading. hope i'm right - this market needs a correction, before continuing on another leg up. good luck!

also it seems like there is way more $ to be made with puts as opposed to calls. pick up some, you'll be glad you did!

[Edited on January 12, 2011 at 1:44 PM. Reason : more $]

1/12/2011 1:43:19 PM

If you're expecting a pullback in the next couple of months you should be selling calls now and selling puts when the market bottoms.

1/12/2011 2:34:01 PM

^i'm not really familiar with that stuff. i just buy calls and puts and then sell them.

1/12/2011 3:14:49 PM

i bought some mutual funds last march. They dipped right after i bought them, then came back even, now they are up a little. Something edward jones recommended. Meh.

1/12/2011 3:40:27 PM

Finally got my 401k rolled over there is something so satisyfying about dumping all those mutual funds and buyiny my own etfs with a decent amount of dough

Put about 40% in ECON - emerging market consumers etf, since that's the growth market of the future

18% in GDX - gold miners, its pulled back good entry point since metals have much further to go due to currency debasement

22% in MOO - agriculture etf, also helped by runaway food inflation and currency debasement

The last 20% I'm not sure yet... Debating on high quality US stocks (grantham and others like them best long term) or healthcare since obamacare virtually ensures that industry will expand profits while we bankrupt the nation... Any thoughts?

1/13/2011 2:57:40 PM

I'd go for more diversity than that.

40% is very heavy, even for an ETF.

1/13/2011 3:27:34 PM

Yeah, especially for emerging markets. At the very least I'd split it up between emerging markets and Asia pacific.
I'd put the remaining 20% in a large cap fund.

1/13/2011 4:11:06 PM

I've been picking up some DGS on the dips.

1/13/2011 7:48:54 PM

BP is way up today. Just to try it out I sold 10 weekly calls on it at $50 for $.03 when the stock was at $49.11 at 3:59. I instantly pocketed $30 with pretty much zero risk.

This might be a new way to get beer money on Fridays.

1/14/2011 4:07:37 PM

Please explain.

1/14/2011 4:08:08 PM

I got money for selling the call at 3:59 and it expired at 4:00.

Its not much money, but I'd feel fine doing higher volume due to the small risk involved.

1/14/2011 4:12:58 PM

Bah, I still don't understand options. How does one sell a call. Do you not have to buy something first?

1/14/2011 5:22:15 PM

I think he's saying that he's selling naked calls on it. The risk is that if the stock goes up to greater than the strike price ($50, in this case), he's on the hook to buy $50,000 worth of BP at market price (>$50/share) and then resell it at a loss for $50/share. You'd have to have a big portfolio or a lot of margin available to make significant money doing this.

The mitigating factor is that the odds of the stock price jumping up 1.8% in less than 1 minute are pretty damned slim.

1/14/2011 6:25:17 PM

^ Nailed it.

1/14/2011 7:12:15 PM

Investing 10+ years and I still don't understand naked calls. Little help...

1/14/2011 9:06:42 PM

you understand generally how calls work in general, right?

A covered call is when you sell the right to buy stock that you own. A naked call is when you sell the right to buy the stock, but you don't actually own the stock to back it up...so if that call option meets the strike price and gets exercised, you have to buy enough stock to cover it, just for it to get called away at a loss to you.

the flipside is that it's money for nothing and chicks for free.

[Edited on January 14, 2011 at 9:14 PM. Reason : ]

1/14/2011 9:13:57 PM

But with a call, aren't you betting the stock will go up?
Would you have had to buy $50,000 worth of bp it the stock hit $50+ ?

1/16/2011 12:36:40 PM

http://www.zerohedge.com/article/apple-ceo-steve-jobs-says-board-has-granted-him-medical-leave-absence

Quote :

"AAPL shares to drop based on Steve Jobs temporarily stepping down for medical reasons? Jobs also says that he will continue as CEO and be involved in major strategic decisions for the company. As a reminder Apple accounts for about 20% of the Nasdaq. As a further reminder, the last time it was even rumored the COO was leaving, the stock tumbled $20 in the span of a few milliseconds. German listed Apple shares fall 1.8% following the news. Memo from Jobs to employees: Apple CEO Steve Jobs today sent the following email to all Apple employees: "

Quote :

"Team, At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company. I have asked Tim Cook to be responsible for all of Apple’s day to day operations. I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011. I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy. Steve"

[Edited on January 17, 2011 at 10:29 AM. Reason : couldn't get it to quote within a quote]

1/17/2011 10:26:29 AM

My biggest concern about AAPL over the past few years has always been his health. That's the one wild card that could really fuck the stock price.

1/17/2011 10:29:04 AM

Quote :

"40% is very heavy, even for an ETF."

forgot about this post i made.... maybe i should re-word.

This is a 401k rollover from a company i worked less than 2 years for so its really just over $20k total to invest. i didnt want to do anything under $4k in one ETF because it's a $20 commission per purchase (0.5%) of the principal at that price point.

My total portfolio is significantly over 40% international its probably more like 70% id have to check the numbers after this latest allocation.

I do like the large cap space as far as US goes that's probably where my contributions will be going for now in my new 401k since i only have a few mutual funds to select from. i think i saw blackrock global allocation so that'll get a big chunk too since no ones really done better than those guys the past decade or two (although the size of that fund is a little scary but at least they have a lot of flexibility in their investment criteria)

anyway i went with 40% in Emerging Market Consumer ETF (ECON). It's a good space I think it has a lot of companies that benefit from the middle class growth in emerging markets... companies like WalMart of Mexico, AMbev, Grupo Televisa SA, etc

20% energy (xle i believe) etf, 18% gdx (miners as i believe we're only about halfway thru the metals bull market), and 22% moo as i really love agriculture for the next decade or two.

I couldnt pull the trigger on healthcare i dont like all the govt interference with the providers and ive never had much interest in biotech just seems like too much risk without enough reward compensation... i like the pharmaceuticals but went with energy instead as it covers curerncy devaluation, peak oil, international growth, etc

1/17/2011 6:06:11 PM

Damn, GLD down 2% today. Is it literally just gold? I have a nice natural resource etf with gold, silver, oil, natural gas etc, although I suppose you may get some exposure to that in your energy fund.

1/17/2011 6:38:48 PM

ive got about 8k in CRBQ (commodity producers index), 4k in GLD, 4k in GDX (miners), and 5k in MOO (agriculture producers) thats the way i play commodities right now.

I really don't watch the day to day fluctuation too much in this part of my portfolio because it's a long term play on currency destruction that I would never consider selling any portion of right now. Now once everything goes parabolic I will be watching it like a hawk

1/17/2011 7:34:50 PM

What's the asset allocation for the rest of the portfolio?

1/17/2011 7:41:29 PM

Quote :

"Bah, I still don't understand options. How does one sell a call. Do you not have to buy something first?"

This was probably the most non-intuitive thing for me to get at first. As far as options goes, the first thing that has to happen is someone has to offer for sell the option. That is, if for a given strike month if there haven't been any options traded, the first thing that will happen is someone will offer one for sell. This can be a call or a put, and when the "writer" offers it and has a buyer, a contract between the two is entered.

So, you don't have to have any sort of interest (ie, own shares) in the underlying stock to write an option contract. And if you don't, this is being "naked".

In Joshuas case, he wouldn't have been on the hook for 50k had the option landed in the money, he would have just been on the hook for the difference in 50 and where the stock landed. Had it finished at $51 he would have just seen $100/contract + commission subtracted from his account the next statement.

Now, had he not done this near expiration, at some point his broker would force him to eat the loss if the stock started really running away.

1/17/2011 7:43:41 PM

Thanks for the elaboration.

Is there some way to set it to sell as soon as it crosses the strike price?
How can one see options expiring soon?

1/17/2011 7:55:35 PM