gary17 Posted March 10, 2014 Posted March 10, 2014 Today I bought $120 strike 2016 IWM puts. Maybe that will help me calm down. Hi Eric - how does this work in terms of sizing the hedge - do you look at your overall portfolio value; pick a percentage that you want to hedge - and buy enough puts where the value = the % of the portfolio that you want to hedge? Thanks Gary I'm having a freakout at the moment. There is no grand formula. Just panic decision making. just calm down.... if everybody thinks a correction is just about to happen - chances are it won't happen. that's just how it works. Gary
wachtwoord Posted March 10, 2014 Posted March 10, 2014 Sold out of NVS after holding a little over 2 years and replaced it with PKX <$64.
gokou3 Posted March 10, 2014 Posted March 10, 2014 Added to my Jan 2016 KMI $30 strike calls. 2014 dividend is expected to be $1.72 per year. If it rises 8% a year for the next 2 years and the yield remains at 5%, we get a $40 stock and the $30 calls will go up 160% at expiry. If the yield increases to 6%, I will still almost break even. As a poster on the KMI thread mentioned, KMI has authorized another $100M of common/warrant repurchases: https://www.bamsec.com/filing/150630714000014?cik=1506307 However, per the 10K release last week, the company used the last $94M of the $250M authorization to buy back the commons. Thus, perhaps the company signals the share price will not rise quickly. There are 348M warrants outstanding @$1.80, or $626M market value for these warrants. Btw, it's interesting to see a few posters entering market puts. I am keeping a lot of dry powder too, hoping for an opportunity to buy hands-over-fist soon.
Shawn Posted March 10, 2014 Posted March 10, 2014 Mostly the U.S. Bank TARP warrants. In particular Bank of America Class A and the Wells Fargo ones. I'd like to build a position in Rainmaker Entertainment though. I'm still in the phase of researching the company.
CorpRaider Posted March 11, 2014 Posted March 11, 2014 PLUG weekly calls...just kidding! It is getting crazy.
Guest Posted March 11, 2014 Posted March 11, 2014 PLUG weekly calls...just kidding! It is getting crazy. Dude, I was looking at PLUG here recently since it was on a "most actives" list. I remember the dot com days that it was a high flyer and it brought some back some memories. haha. It's up over 400% this year, over 4,600% (not a typo) over the past year. Craziness.
ZenaidaMacroura Posted March 11, 2014 Posted March 11, 2014 Added to my Jan 2016 KMI $30 strike calls. 2014 dividend is expected to be $1.72 per year. If it rises 8% a year for the next 2 years and the yield remains at 5%, we get a $40 stock and the $30 calls will go up 160% at expiry. If the yield increases to 6%, I will still almost break even. As a poster on the KMI thread mentioned, KMI has authorized another $100M of common/warrant repurchases: https://www.bamsec.com/filing/150630714000014?cik=1506307 However, per the 10K release last week, the company used the last $94M of the $250M authorization to buy back the commons. Thus, perhaps the company signals the share price will not rise quickly. There are 348M warrants outstanding @$1.80, or $626M market value for these warrants. Btw, it's interesting to see a few posters entering market puts. I am keeping a lot of dry powder too, hoping for an opportunity to buy hands-over-fist soon. Wait they backward adjust the calls for dividends?
Guest Posted March 11, 2014 Posted March 11, 2014 Wait they backward adjust the calls for dividends? Nah, Dividend $1.72 and compound that at 8% over 2 year is about $2 per share. If the yield of the stock is stays consistent at 5% (like it is now), that equates to a $40 per share stock price. The Jan 2016 $30 calls are about $3.84. If the stock trades at $40, they'll be worth $10 (or more depending on time). That's about 160% return.
gokou3 Posted March 11, 2014 Posted March 11, 2014 Wait they backward adjust the calls for dividends? Nah, Dividend $1.72 and compound that at 8% over 2 year is about $2 per share. If the yield of the stock is stays consistent at 5% (like it is now), that equates to a $40 per share stock price. The Jan 2016 $30 calls are about $3.84. If the stock trades at $40, they'll be worth $10 (or more depending on time). That's about 160% return. Thanks for clarifying for me. :)
Valuebo Posted March 11, 2014 Posted March 11, 2014 Today I bought $120 strike 2016 IWM puts. Maybe that will help me calm down. Today I bought $120 strike 2016 IWM puts. Maybe that will help me calm down. And half the board just went into panic mode selling everything not nailed down. $120 strike 2016 IWM puts. Thanks, Lance ;D I bought more CRM puts a few days ago tho, all OTM long duration.
Guest Posted March 11, 2014 Posted March 11, 2014 Wait they backward adjust the calls for dividends? Nah, Dividend $1.72 and compound that at 8% over 2 year is about $2 per share. If the yield of the stock is stays consistent at 5% (like it is now), that equates to a $40 per share stock price. The Jan 2016 $30 calls are about $3.84. If the stock trades at $40, they'll be worth $10 (or more depending on time). That's about 160% return. Thanks for clarifying for me. :) No problem man. haha
sethatk Posted March 11, 2014 Posted March 11, 2014 Thinking about adding GCI and buying ACS again, but I would have to sale something, because I am all in...mulling over saling MSFT.
blainehodder Posted March 11, 2014 Posted March 11, 2014 Bought OGZPY and RSX calls. Crazy dumping on ALSK and GNCMA. Lather, rinse, repeat seems like a reasonable idea.
ERICOPOLY Posted March 12, 2014 Posted March 12, 2014 Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself.
ItsAValueTrap Posted March 12, 2014 Posted March 12, 2014 Shorted FB :( Can't find much to buy... Geez. While I am shorting a bunch of stocks and trade against other people on this board (ATPG, PRXI, SD, etc.)... I would never short Facebook. Facebook and Google advertising works and is extremely compelling to advertisers. Affiliate marketer run blogs where they talk about how much money they make. Some of them advertise on Facebook and make a lot of money on it. On a cash flow basis, Facebook doesn't look overvalued at all. I wish you the best of luck on your short.
hyten1 Posted March 12, 2014 Posted March 12, 2014 +1 I like Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself.
buylowersellhigh Posted March 12, 2014 Posted March 12, 2014 Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself. How are you buying depressed stocks w/o realizing profits on the IWM short? Are you assuming some unencumbered cash?
ERICOPOLY Posted March 12, 2014 Posted March 12, 2014 Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself. How are you buying depressed stocks w/o realizing profits on the IWM short? Are you assuming some unencumbered cash? I have synthetically unencumbered cash. My BAC puts are $17 strike and $15 strike. I ditched all the $12s. Plus, don't forget that when I short it I will get a big slug of cash (I'm selling some IWM that I don't own, and they pay me cash for that). I can then spend that cash after the market has dropped.
moody202 Posted March 12, 2014 Posted March 12, 2014 Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself. Don't you pay capital gains when you eventually sell the depressed stock for gain?
peter1234 Posted March 12, 2014 Posted March 12, 2014 Slightly off topic: A free Kindle eBook ;) Gems from Warren Buffett - Wit and Wisdom from 34 Years of Letters to Shareholders [Kindle Edition] http://www.amazon.com/exec/obidos/ASIN/B008G6S37M
moustachio Posted March 13, 2014 Posted March 13, 2014 I have bought some NROM today since it is down after earnings. Call me crazy, but I actually believe that the exceptionally bad weather has negatively impacted a lot of businesses temporarily...
ERICOPOLY Posted March 13, 2014 Posted March 13, 2014 Tactical error... I need to change that trade. I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit. Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence. Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased. No realized gains that way. Keep the assets for myself. Don't you pay capital gains when you eventually sell the depressed stock for gain? Well, take right now for example. I have BAC shares that have a big gain -- but I'm not selling them. Instead, I hedged. The cost of the puts is minor relative to the earnings power of the shares. Also, the capital gains are forgiven when the marriage community is dissolved (if either I die or my wife does). So it's sort of like a life insurance policy in a way -- the family gets relieved of a big tax liability. Call it a "death benefit".
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now