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Started By
Message
All You Ford People Out There, This is what I'm doing
Posted on 4/18/12 at 9:59 am
Posted on 4/18/12 at 9:59 am
While the idea of options maybe scary to some of yall, here is what I just did I think I will make a little money on: stay with me
I just buy wrote a covered call.
I bought 200 shares of F at 11.73. I wrote a covered call on expiring on May 19. I chose the $12.00 strike price. For this I got paid $30 per contract of 100 shares. So $60
So what I have done is entered into an agreement with someone to sell my shares of Ford at $12.00 to them if it hits $12 before May 19. For this right to buy my shares at $12, somebody is paying $30 per contract of 100 shares, so $60.
Outcome:
Cost Basis:
$2,346 (200 shares @ 11.73)
-$60 ($ I get paid)
= 2,286
If Ford hits $12 and my shares get taken, I will sell 200 shares @ $12 for a total of $2,400.
Profit= 2,400-2,286= $114+$10 dividend I'll recieve during the time period= $124
So my rate of return=
($124/2,286)
= 5.4% Gain in 31 days if F hits $12
If Ford does not hit $12, then I get paid $60 bucks and I keep my shares which I'm ok with.
Why am I using this strategy? I dont think F will go above 12 in the next month and I want to generate a little extra income. If it does, oh well I miss out.If I did this every other month, my annual rate of return would be:
6 X 5.4% = 32.5% Which I am happy with for a year!
You may think oh $124 is nothing, but I dont have a huge amount of capital. Look at the 5.4% return in 30 days or the free $60! before comission of course!
I just buy wrote a covered call.
I bought 200 shares of F at 11.73. I wrote a covered call on expiring on May 19. I chose the $12.00 strike price. For this I got paid $30 per contract of 100 shares. So $60
So what I have done is entered into an agreement with someone to sell my shares of Ford at $12.00 to them if it hits $12 before May 19. For this right to buy my shares at $12, somebody is paying $30 per contract of 100 shares, so $60.
Outcome:
Cost Basis:
$2,346 (200 shares @ 11.73)
-$60 ($ I get paid)
= 2,286
If Ford hits $12 and my shares get taken, I will sell 200 shares @ $12 for a total of $2,400.
Profit= 2,400-2,286= $114+$10 dividend I'll recieve during the time period= $124
So my rate of return=
($124/2,286)
= 5.4% Gain in 31 days if F hits $12
If Ford does not hit $12, then I get paid $60 bucks and I keep my shares which I'm ok with.
Why am I using this strategy? I dont think F will go above 12 in the next month and I want to generate a little extra income. If it does, oh well I miss out.If I did this every other month, my annual rate of return would be:
6 X 5.4% = 32.5% Which I am happy with for a year!
You may think oh $124 is nothing, but I dont have a huge amount of capital. Look at the 5.4% return in 30 days or the free $60! before comission of course!
5
Posted on 4/18/12 at 10:04 am to greenhead11
quote:
before comission of course!
Doesn't this cut into your profit significantly since you aren't putting very much on the table?
Posted on 4/18/12 at 11:38 am to GregYoureMyBoyBlue
"I just buy wrote a covered call"
Posted on 4/18/12 at 12:14 pm to GregYoureMyBoyBlue
Commission does impact it slightly, but it is less magnified the more contracts you do. I currently have 5 free trades thru TD some I'm not worried about it now, but each additional options contract is like .75. So I wouldn't do it on one contract probably cause a $20 total commission would eat into your profit...
Excuse me "buy write" but since I was using past tense I buy wrote. Idk semantics
Excuse me "buy write" but since I was using past tense I buy wrote. Idk semantics
Posted on 4/18/12 at 12:43 pm to greenhead11
I was thinking you could have just said I wrote a covered call. Semantics.
Posted on 4/18/12 at 1:43 pm to greenhead11
Totally unrelated, but regarding your medical aspirations the following might be helpful to you:
LINK
LINK
Someone seems to post on that topic ~ every two months for whatever reasons.
I am confused by your postings. 3-4 weeks ago in another OP's thread you posted your employer had paid off some student loans for you, but you were still on the hook for $200k in loans. I assumed you had been in medical school and not finished and went to business school and your employer paid off the loans for BS. If you do already have $200k of SL's outstanding and you are contemplating taking on another $200k in SL's then my take is you are irrational, given the upside of what you are currently doing. If you have zero and are contemplating taking on $200k and you are looking at removing yourself from the workforce for 6-8 years, it would be easy to believe that to be irrational to your future wealth. You are currently in a good occupation with significant upside, just my 2 cents as an anonymous poster.
If you are seeking more client interaction in your current position it will come with more experience and job performance. Good luck with whatever you choose to do.
LINK
LINK
Someone seems to post on that topic ~ every two months for whatever reasons.
I am confused by your postings. 3-4 weeks ago in another OP's thread you posted your employer had paid off some student loans for you, but you were still on the hook for $200k in loans. I assumed you had been in medical school and not finished and went to business school and your employer paid off the loans for BS. If you do already have $200k of SL's outstanding and you are contemplating taking on another $200k in SL's then my take is you are irrational, given the upside of what you are currently doing. If you have zero and are contemplating taking on $200k and you are looking at removing yourself from the workforce for 6-8 years, it would be easy to believe that to be irrational to your future wealth. You are currently in a good occupation with significant upside, just my 2 cents as an anonymous poster.
If you are seeking more client interaction in your current position it will come with more experience and job performance. Good luck with whatever you choose to do.
Posted on 4/18/12 at 1:59 pm to greenhead11
Thank you for explaining to us how options work. Nobody here had any idea before you educated us.
Posted on 4/18/12 at 2:24 pm to bpfergu
quote:
Thank you for explaining to us how options work. Nobody here had any idea before you educated us.
Actually I don't mind that at all. It is very useful for someone that is new to the investing game and doesn't know how many things work. Don't tell me to go read Investopedia or something. Anybody can do that. Reading real life investing experiences from people (and their thinking behind it) on this board is actually pretty great. Here you can engage in a conversation with the person and ask follow up questions if you feel the need. If reading it was a waste of time for you, why did you even take the time to comment on it? Get off your high horse.
@greenhead11 - thanks for your post
Learned something new today.
Posted on 4/18/12 at 6:42 pm to tirebiter
Thank you for those links, and your commentary. I see one of the posters there is in the same position I'm in... To clarify I had loans from business school that I just successfully paid off, and am subsequently deciding about matriculating into med school vs. staying in my current profession and trying to advance.
This is my dilemma. While I'm not killing it now, I easily feel I could be making in finance what I would start making as a doctor 8 years from now. So I will loose 8yrs of income and gain 160k in debt to potentially get to the same point I project I would be at continuing to work. Seems a little irrational from a number stand point, but I can't think like that and that's what I'm now trained to do!!!! I see everything as an investment. Hmmm is this ribeye a good investment? Or is it expensive and detrimental to my health? But I like flask's quote on this subject
However, (big however) finance is not garuanteed. The market could tank and I could easily loose my analyst position. The turn over is so high. Vs. medicine- doctor shortage is increasing so job security is always there
quote:
If you have zero and are contemplating taking on $200k and you are looking at removing yourself from the workforce for 6-8 years, it would be easy to believe that to be irrational to your future wealth.
This is my dilemma. While I'm not killing it now, I easily feel I could be making in finance what I would start making as a doctor 8 years from now. So I will loose 8yrs of income and gain 160k in debt to potentially get to the same point I project I would be at continuing to work. Seems a little irrational from a number stand point, but I can't think like that and that's what I'm now trained to do!!!! I see everything as an investment. Hmmm is this ribeye a good investment? Or is it expensive and detrimental to my health? But I like flask's quote on this subject
However, (big however) finance is not garuanteed. The market could tank and I could easily loose my analyst position. The turn over is so high. Vs. medicine- doctor shortage is increasing so job security is always there
Posted on 4/18/12 at 6:43 pm to iPadThai
Not a problem. I'm glad someone got something out of it! That's why I shared the opportunity some people wouldn't otherwise consider
Posted on 4/18/12 at 7:16 pm to greenhead11
The medical profession might be a little less appealing in the near future depending on how the whole gubment health care program comes out. The bureaucracy can be stifling.
On the other hand, all these old geezers trying to figure how to retire and keep enough of their money working could be the high demand job going forward.
On the other hand, all these old geezers trying to figure how to retire and keep enough of their money working could be the high demand job going forward.
Posted on 4/19/12 at 2:26 pm to greenhead11
quote:
I see one of the posters there is in the same position I'm in
What I was trying to convey is many in the same position as you, ie currently employed making good money, post that same question somewhat frequently on bogleheads. I also was trying to convey that from a financial/NPV scenario the choice is viewed as irrational, but that alone doesn't mean it is the right or wrong choice for you. Certainly not criticizing your choice either way. Believe me, I lived through an extended period of downsizing/mergers/buyouts working in finance and what I did was not directly transferable to positions with other firms at the income level I was at. Definitely stressful thinking about that through the years, which is a major reason why I chose to employ a high savings rate and keep debt to a minimum.
There are a lot of working Dr.'s and retired Dr.'s on that board. Many say that if someone is 29 or older when they first begin medical school and plan on being a specialist not to do it. Join the board and PM them through the board, they will be happy to communicate with you. A good poster would be EmergDoc, he also has a site for physicians seeking to improve their financial planning and investments @ whitecoatinvestor dot com. He is relatively young and went through the service to fund his school costs. He is sharp and could give you some good feedback, he has been working in the private sector for a good period of time.
My dentist said he chose dentistry instead of med school after speaking with a lot of doctors. Dentists that are doing cosmetic work and implants are making very good money, cash pay for the most part as dental insurance sucks, and most put in a lot less hours than physicians. Dentistry might not be appealing to you, though. A family member was a dentist, he had highs and lows, especially when trying to sell the practice which ended up taking 10-yrs. Overall it was a rewarding career for him professionally and financially, although he teetered on going BR a few times due to various economic cycles/busts in farming & O&G in the area, and the rise of HMO's and lack of reimbursement.
Good luck.
Posted on 4/19/12 at 2:49 pm to greenhead11
Are you working in new Orleans or elsewhere?
Posted on 4/19/12 at 2:55 pm to greenhead11
(no message)
This post was edited on 4/19/12 at 2:58 pm
Posted on 4/19/12 at 4:19 pm to tirebiter
quote:
whitecoatinvestor dot com
Very interesting site..
quote:
NPV
Definitely got that and have been thinking about it like that. Through in there the possibility of losing your shirt to some jackwagon ambulance chaser. Its borderline irrational. Though if my salary stayed at current levels, I wouldn't be happy at 30 making what i am now. My parents are now seemingly pissd at me for getting my MBA "as it has changed my way of thinking" and they would like to see me go to med school (i used to be all about it). But are kind enough not to pressure me in the least. It is really the financial POV that makes me think twice.
But as has been mentioned before I can always come back to business in general. Probably won't be able to come back to something like I'm doing now as I will be out of touch with investing. But I would hope there would be unique opportunities that would provide fair compensation, better working hours, and less liability than practicing medicine.
Posted on 4/19/12 at 4:24 pm to greenhead11
Didn't you say in the other thread that you already bought a place in nola? But now you're saying you might be crawfishin a bit?
Posted on 4/19/12 at 6:27 pm to kfizzle85
Yea I got an offer accepted, but we dont close till June so I got time for cold feet. Honestly the real only reason I have cold feet is because I've been thinking in NPV and stress terms. If I was garuanteed 200k I'd probably do it without second thought. But when I think about the debt, stress, and what I could make at my current job over the next 8 years, my mind gets clouded.
Posted on 4/19/12 at 6:55 pm to greenhead11
Oh and I wish I could stand to look at a mouth 4 days a week like a dentist. Easy life style
Posted on 4/19/12 at 7:35 pm to greenhead11
quote:The grass always seems greener in the other guy's yard.
Oh and I wish I could stand to look at a mouth 4 days a week like a dentist. Easy life style
quote:i.e., this was your self-assessment from a previous thread.
While my life right now is arguably as hard as a doctor being a junior analyst
FWIW, most doctors, and virtually all MDs in training would LOL at that.
Probably justifiably.
Posted on 4/19/12 at 8:17 pm to NC_Tigah
[/quote]The grass always seems greener in the other guy's yard.[/quote]
Yea that is easy thinking. I just happen to notice the massive 34ft boston whaler that sits behind my dentist office is conveniently not there every Friday when I used to drive by.
Oh I know any resident would love to get into a pissing match with me about who has got the harder schedule. They probably do. Like them I have the unique privilege of being " on call" and up at all hours of the night as I cover exclusively emerging/frontier markets. So if we have a position that needs to be monitored or a conditional trade that depends on something, guess who stays in the office for 36 hours and sleeps on the couch?
But this happens in any profession. Your gonna be the work bitch in any profession. That's what med students and residents are for.
Yea that is easy thinking. I just happen to notice the massive 34ft boston whaler that sits behind my dentist office is conveniently not there every Friday when I used to drive by.
quote:
virtually all MDs in training would LOL at that.
Oh I know any resident would love to get into a pissing match with me about who has got the harder schedule. They probably do. Like them I have the unique privilege of being " on call" and up at all hours of the night as I cover exclusively emerging/frontier markets. So if we have a position that needs to be monitored or a conditional trade that depends on something, guess who stays in the office for 36 hours and sleeps on the couch?
But this happens in any profession. Your gonna be the work bitch in any profession. That's what med students and residents are for.
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