Visa getting roughed up today?
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re: Visa getting roughed up today?
Posted by STB on 8/2 at 10:08 am to Ace Midnight
One of the main things about options that are nice as opposed to buying the stock is that your losses are usually capped at whatever you purchased the contract at. However, say you purchased a call for a stock at a certain price, your gains can be potentially unlimited if the stock keeps going past that price as long as the contract hasn't expired. Bullish on a stock would be buying a call or selling a put, and bearish would be the opposite. You can use these to hedge yourself through covered calls and the like, as well as a source of income. Read up on some books, the world of options is fascinating.

This post was edited on 8/2 at 10:09 am

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Posted by Jake88 on 8/2 at 10:10 am to ThaBigFella
Is there an "Options Trading for Dummies" available?

Something that doesn't assume you already speak the lingo.



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Posted by RunningBlake on 8/2 at 10:14 am to Ace Midnight
Does anyone know of any good, beginner-level reading on selling puts?


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Posted by Ace Midnight on 8/2 at 10:16 am to Jake88
quote:

Is there an "Options Trading for Dummies" available?

Something that doesn't assume you already speak the lingo.


investopedia.com has a few basic articles - they eventually start to talk in circles, but it got me from 0 to about 1, relatively speaking. My brokerage has a profit/loss analyzer for every kind of option imaginable.

My problem is valuing stock in the future - I'm not really confident in my ability to do that yet. TBF is correct that, if you're willing to buy the stock at the strike price, you might as well write put contracts and pocket the commission - that's a "can't lose" move if you're both bullish on the stock and want to be long in it.

However, if you're not quite as liquid, you're going to reduce your profit by getting in and out of stocks, and you'll probably have to start chaining options to limit your ultimate risk (which can start to amp up with a volatile stock or sudden shift in the market.)



This post was edited on 8/2 at 10:18 am

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Posted by Lsut81 on 8/2 at 10:17 am to Ace Midnight
quote:

I am currently in Kindergarten for Options. However, I did, adroitly, select Optionsxpress as my brokerage. Hopefully, I'll be an Options middleschooler by early next year. I just want to make sure I understand the risks before I just dive in.

I can do basic technical analysis. I understand dividends, from a very elementary level


What would be awesome is if one of the gurus around here would start a stickied thread "Basics of Trading" or something like that. A thread where they can either post info or links to laymans explanations of key things like that.



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Posted by ThaBigFella on 8/2 at 10:24 am to Lsut81
Ace, I buy what I like at a price that I don't mind holding if i should get "put" the shares. For phillip morris anything under $92, for Visa anything under $190. Well it was $197 last week so to be able to sell a put and grab it at $178.95 next friday or collect $605 per contract is enticing either way.

What I mean is, I wouldn't even be buying it for $185 bc with a $6.05 premium per share I'd keep Im buying a company I love for $178.95 when looking at it's forward earnings, recent earnings report I don't mind paying $190 bc VISA themselves announced a buyback while the shares were at $190. At $6.05/share I'm literally earnings a 3% dividend in a sense....in 7 days! WOW......but like I said I imagine the average retail investor is on the sidelines due to lack of knowledge and the lack of ability to trade 100 shares at a time.

I literally asked a question on here, got some decent help but googled and googled, then messaged a friend of mine and once I got my head wrapped around the concept its been full speed ahead. You won't believe the returns I'd post it, but nobody would believe me unless they've done it before.

I also learned through trial and error that although the puts a year and half out in 2015 give a nice ROI like 20% year over year the weekly puts are bonkers like 1-3% a week depending on how risky you wanna be but the best part is time decay is on your side like selling a put today, if the share is the same price monday and it expires friday, you get time working for you on saturday and sunday while the market is closed so even if the share price doesn't move, monday morning your put will be worth more.


This post was edited on 8/2 at 10:28 am

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Posted by Cousin on 8/2 at 10:44 am to ThaBigFella
quote:

You won't believe the returns I'd post it, but nobody would believe me unless they've done it before.



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Posted by Ace Midnight on 8/2 at 10:47 am to ThaBigFella
quote:

selling a put today


There's no question I'll be selling puts on Friday. I think it is reasonable to pick a stock that's flat or slightly rising - go with the options you're willing to take the shares, if necessary, at the discounted price (worst case) and when you hit your target %, go ahead and close it early.

THAT much I've got - that takes the risk down to as literally as low as you can go. It's just problematic to find one to play every week (and maybe that's too optimistic) and stay liquid enough to absorb the occasional loss.



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Posted by donRANDOMnumbers on 8/2 at 10:48 am to ThaBigFella
Very interdasted


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Posted by ThaBigFella on 8/2 at 10:58 am to donRANDOMnumbers
You don't have to sell on Friday just giving an example of time decay, you sell them on a down day, I sold some visa ones at $185 for next week while at $175 yesterday, they were $11.80 and I closed them this morning under $6 for $6/share profit

This post was edited on 8/2 at 11:00 am

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Posted by Ace Midnight on 8/2 at 10:59 am to ThaBigFella
quote:

I sold some visa ones at $185 for next week while at $175 yesterday, they were $11.80 and I closed them this morning under $6 for $5/share profit


The $190s are going for about that now.



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Posted by ThaBigFella on 8/2 at 11:00 am to Ace Midnight
Bingo price went from $175 to $183

fwiw you can be conservative and sell the puts a month out for a discount to todays price and still make over 20%/year but I'm pretty ballsy and i've got the capital to cover my errors should they happen but Im literally making around 2%/week these last few weeks. Granted I know this is only happening bc the entire market is roaring and not bc im some kind of guru, but I do understand what's going on and in the event of a correction they're shares i don't mind holding at the specified price I sold the put at.


This post was edited on 8/2 at 11:08 am

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Posted by ThaBigFella on 8/5 at 11:11 am to ThaBigFella
congrats to all who bought last week $185 almost!




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Posted by RunningBlake on 8/5 at 11:49 am to ThaBigFella
Thanks BigFella!


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Posted by ell_13 on 8/5 at 12:42 pm to ThaBigFella



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Posted by Cousin on 8/5 at 1:33 pm to ThaBigFella
quote:

congrats to all who bought last week $185 almost!


Still wish I would have got it at 177.5...but it's all good. I only bought 5 shares too so it's not that big of deal. Wish I had more funds to put in but I am just starting out so I will take my time. Thanks though



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Posted by donRANDOMnumbers on 8/5 at 1:43 pm to Cousin
in at 177 as well. thinking of adding on. i'm long anyway.


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Posted by Ace Midnight on 8/6 at 10:18 am to donRANDOMnumbers
quote:

in at 177 as well. thinking of adding on. i'm long anyway.


I got in under 184 today. Honestly, I'm happy - I think the FMV of the stock is ~190 - that's been my target for a while, so a 3 1/4% premium more than covers my transaction costs and gives me a little bit of a built in profit.


This post was edited on 8/6 at 10:21 am

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Posted by ThaBigFella on 8/9 at 7:35 pm to Ace Midnight
Just got this alert in my email, seems a few analysts have a price target well over $205-225 for a 15% or so upside from here

LINK


This post was edited on 8/9 at 7:39 pm

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Posted by Ace Midnight on 8/10 at 9:02 am to ThaBigFella
quote:

Just got this alert in my email, seems a few analysts have a price target well over $205-225 for a 15% or so upside from here


I may start selling put options on this, if I cobble enough scratch together. How long are you typically leaving the put open? Do you just wait for a 1 to 2% profit, close it out, then resell? How often are you doing that - roughly every 10 to 20 days?


This post was edited on 8/10 at 9:03 am

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