What are you buying today?

[boilermaker75]

On 10/28/2021 at 5:26 PM, Gregmal said:

Got a few Jan 2022 42.5s for ~$1.2. If I get put the shares it's "good enough". The biz is inflation resistant and basically a royalty/call option on prosperity/wage increases  for the poor people. 

 

It is almost like getting paid for putting in a limit order.

[Gregmal]

12 minutes ago, boilermaker75 said:

 

It is almost like getting paid for putting in a limit order.

Haha its exactly that. This sort of thing applies to a lot of investing. You really just have to wrap your head around the intended purpose and objective of what you're doing, and then its really easy and for the most part stress free. I have had so many convos with people about selling puts over the years and it always initially came back with some iteration of "yea but if the stock goes down a lot you get screwed"....but then its like....well, you might get screwed, but you get screwed less than if you just bought the shares. And if you arent interesting in owning the shares, why would you short the put? And then theres a eureka! moment. 

[Spekulatius]

56 minutes ago, Gregmal said:

Haha its exactly that. This sort of thing applies to a lot of investing. You really just have to wrap your head around the intended purpose and objective of what you're doing, and then its really easy and for the most part stress free. I have had so many convos with people about selling puts over the years and it always initially came back with some iteration of "yea but if the stock goes down a lot you get screwed"....but then its like....well, you might get screwed, but you get screwed less than if you just bought the shares. And if you arent interesting in owning the shares, why would you short the put? And then theres a eureka! moment. 

While this is correct, you are getting screwed if bad news comes out subsequent to selling the put and the rock falls a lot. You are also getting screwed if the stock goes straight up, since you only get the meager put premium and nothing else.

Edited October 30, 2021 by Spekulatius

[Gregmal]

I don’t think I’ve ever felt screwed when a stock goes up that I don’t own.  Here you are just committing to buy it at price that’s currently below market. You’re getting paid not to own it. If you like it enough right now you should just be buying it. 
 

I mean think about it, how many times do you see folks go “I’ll buy the dip”…”can’t wait to buy more at lower prices”…then the dip comes and they shit their pants and freeze up and do nothing. 

Edited October 30, 2021 by Gregmal

[boilermaker75]

6 hours ago, Spekulatius said:

While this is correct, you are getting screwed if bad news comes out subsequent to selling the put and the rock falls a lot. You are also getting screwed if the stock goes straight up, since you only get the meager put premium and nothing else.

 

But not as screwed as if you bought the stock at the higher price. So you do this only if you don't mind owning the stock. 

 

It is like you are selling insurance, no different than BRK's main business, except "paying a claim" is actually buying a stock you want to own but at a better price. It is better than the insurance business if done right. Something Buffett used to do often.

[IceCreamMan]

9 hours ago, Gregmal said:

Haha its exactly that. This sort of thing applies to a lot of investing. You really just have to wrap your head around the intended purpose and objective of what you're doing, and then its really easy and for the most part stress free. I have had so many convos with people about selling puts over the years and it always initially came back with some iteration of "yea but if the stock goes down a lot you get screwed"....but then its like....well, you might get screwed, but you get screwed less than if you just bought the shares. And if you arent interesting in owning the shares, why would you short the put? And then theres a eureka! moment. 

 

Maybe it depends on whether you see the glass as half full or half empty.

 

If the stock goes up a lot, you miss out on all of the upside except for the put premium and would've been better off buying the stock. If the stock goes down, you suffer all of the decline minus the put premium and would've been better off doing nothing.

[competitive-advantage]

On 10/27/2021 at 7:08 PM, MattR said:

It's not the next disney, it's Nintendo. Loved Franchises (Super Mario, Pokemon, Zelda, Metroid....). I would say that their IP is even stronger than something like Mikey Mouse.

Thanks - I agree.

I go to a console café and Nintendo games are still some of the most popular ones decades after their publication.

And I also see younger people with Nintendo Switch etc.

Nintendos R&D is increasing, so the future may look bright:

https://www.google.dk/amp/s/www.tweaktown.com/news/79368/nintendo-gearing-up-spending-for-next-gen-hardware-tons-of-games/amp.html
 

If I shall mention something negative I found out that the usability is lacking when changing to Switch OLED and that there is some issues with being offline because the system needs to control if the user have bought the game legally. I found this info in some Youtube videos.

Edited October 31, 2021 by competitive-advantage

[bargainman]

On 10/30/2021 at 12:29 PM, Gregmal said:

I don’t think I’ve ever felt screwed when a stock goes up that I don’t own.  Here you are just committing to buy it at price that’s currently below market. You’re getting paid not to own it. If you like it enough right now you should just be buying it. 
 

I mean think about it, how many times do you see folks go “I’ll buy the dip”…”can’t wait to buy more at lower prices”…then the dip comes and they shit their pants and freeze up and do nothing. 

 

Oh I've certainly done this.   Several cases where selling credits (either short puts or covered calls) have been some of the 'worse' financial decisions.  I've learned to never go all in on credit selling.  I'll always have some unlimited upside left open, mostly for psychological reasons, but also because if you cut off all your unlimited gains you'll likely greatly limit your returns over time.  Plus it's easier to buy a leap and get unlimited (in theory) gains vs sell credits over 16-30ish months and manage those positions.  Especially if you're busy

[Gregmal]

You guys are entering the trade for the wrong reasons then. @boilermaker75 not surprisingly has it down 100% right.
 

I don’t really give a shit whether i own the stock or not, I’m really just selling insurance to folks on stuff that I can deal with owning at that price/valuation. If MO at 41.30 cost does me in, so be it. But I’d wager(as I am) that I either make money on the put sale or can make money from that basis. I don’t care if it gets bought for $50000 a share tomorrow. If it goes to $25 I should’ve been more selective obviously in hindsite, but that’s always a risk in the market anyway. 
 

People love to complicate the heck out of things which is what I think is going on here. Every stock can go up or down a lot. That’s not a risk specific to selling puts. 

[bargainman]

On 10/28/2021 at 9:19 AM, Dean said:

 

V as well for me. 

 

What happened to make V and MA drop?  Any thoughts on impact short or long term?

[Gregmal]

I mean another iteration of the benefit is if you want to go long sell a shorter dated put and buy a longer dated call and unless YOU ARE WRONG you never even have to take money out of your pocket. 

[bargainman]

56 minutes ago, Gregmal said:

I mean another iteration of the benefit is if you want to go long sell a shorter dated put and buy a longer dated call and unless YOU ARE WRONG you never even have to take money out of your pocket. 

There are many options variations and enough greeks to shake a stick at.  You do generally want to sell short term and buy long term, but even that has exceptions.  Usually I buy LEAPs fairly ITM on long term solid companies and hold enough cash where I'm not overly leveraged.  Were I to sell puts I'd probably become leveraged.  I know folks who oversold puts and got wiped out a couple of times cause they weren't careful.  Just cause there's no money out of your pocket doesn't mean there couldn't be.  That said, I'm probably too conservative at times

[E. Nashton]

1 hour ago, bargainman said:

 

What happened to make V and MA drop?  Any thoughts on impact short or long term?

 

If I had to pick a narrative I would point to V's guidance released during the Q report and the overhang of more probes. As for short-term - no clue. Longer-term - well I'm willing to purchase shares at these levels and to add to my position if it drops even more. I don't think it's screaming cheap but I also don't think I'll lose money on this position in the long run. Bottom line, I think I can meet my hurdle rate with this over time and I welcome cheaper prices. It's a quality toll booth company and yes there's coming competition from new entrants but IMO V/MA will continue to chug along at surprisingly good growth rates (absolute not relative or comps) and unless it completely gets rerated in the long term, it's a fine position.   

[Gregmal]

48 minutes ago, bargainman said:

There are many options variations and enough greeks to shake a stick at.  You do generally want to sell short term and buy long term, but even that has exceptions.  Usually I buy LEAPs fairly ITM on long term solid companies and hold enough cash where I'm not overly leveraged.  Were I to sell puts I'd probably become leveraged.  I know folks who oversold puts and got wiped out a couple of times cause they weren't careful.  Just cause there's no money out of your pocket doesn't mean there couldn't be.  That said, I'm probably too conservative at times

Yea I mean look, everyone needs to find their comfort zone. I've found over time, finding a comfort zone is sometimes facilitated by stepping out of ones comfort zone just a little bit and testing out new stuff or stuff that one might "perceive" as risky. Just this year alone Ive probably generating a double digit return from put sales. Gotten exercised less than 15% of the time. Almost everything that was put to me was later sold at a profit. Pick your spots. Stick with stuff you like, or stuff you think is too good to pass up(IE GME March $20 puts for $1.50 when the stock is at $300 in February LOL)...Never risk ruin...period.

 

I just think too often people spend so much time assigning these absurd probabilities or risks to things that just dont warrant it. I still cant get out of my head all the "yea but covid killed retail, malls are dead" nonsense last year back when Simon was at $60. At some point its just like.....really????? Why even invest if at this sort of slam dunk opportunity you still talk yourself out of it? Even if you bought it the day before the covid decline at $140(I did, in addition to a shit ton of LEAPs at $50)...you ended up being fine not even 12 months later. So just sometimes, I try to encourage folks to step outside the vacuum because the world doesnt exist in one. Framing things in an unconventional way often helps change your perception. @boilermaker75 example is brilliantly put. Its selling insurance, the best type, with the lowest risk, and only at your discretion. If done correctly, its very, very, hard to lose.

[ANP301191]

On 10/30/2021 at 10:34 PM, Spekulatius said:

@ANP301191 What is your thesis on TTM?

 

1) Generally the rising case of "consumerism" in India added with the lower rate of financing of any long-term purchase (home/car/etc.) versus inflation/sd means that people will buying a ton of cars in India at least amongst the middle classes. As a side point, I genuinely believe that the Indian middle class will come out of the pandemic with a huge pent up demand as most people in the services businesses saw wages jump over the past two years and no one was spending on anything other than the bare essentials.

 

2) Green-ifying indian infrastructure - Tata Motors is one of several companies working with local and state governments to add greener buses/build up the green infrastructure to support the EVs.

 

3) Management - there are a few companies working on the green-tech side of the Indian infrastructure business, but I trust Tata more than them all. Granted Tata Motors has been a blackhole of money since they went around the world buying assets (definitely not a fan of their purchase of the Range Rover purchase), but at least they tell you when they burn cash, other Indian companies find very interesting ways of hiding it on the balance sheet. Additionally, management seems to have realized that their competitive advantage is India, and being one of the best automotive businesses in India is probably going to be sufficient in the next decade - a lot of their recent investment (purchasing Ford's factories in India earlier last month) are in India.

 

Do think that you should have a very, very strong view on growth in India to buy it at these prices though, seems a bit euphoric if you look at the charts. My last purchase was like a 5% top up of my position and was less than 0.5% of my portfolio, the large part of my position was built in around the 350INR price for full transparency.

 

 

[WFF]

Bought some APTS April 10 Calls

[Red Lion]

I sold APO $65 1/20/23 puts for $6.50

[rkbabang]

Another Black Swan purchase:  AAL Jan 2023 $10 Puts.  Thanks @Gregmalfor the idea.

 

Edited November 1, 2021 by rkbabang

[boilermaker75]

I wrote some BRKB 280-strike Nov 12 expiration puts for $1.61 per share this morning. I would not mind getting these put to me, it would be like buying BRKB today at $278.39. Although it would put me on margin and I would then write some 280-strike covered calls, effectively the same thing as the original put sale. If BRKB closes out of the money I pocket the insurance premium. It is a little like being on margin, but getting paid instead of paying.

 

Edit: I have been doing this for about 25 years.

Edited November 1, 2021 by boilermaker75

[abcd]

I am curious on how the brokerage house charges interest, when you sell puts without having the cash balance in the account to support it, meaning you will have to use your margin to honor the put, when it is time.

[Dinar]

RELX PLC - RELX is the ticker

[LC]

2 minutes ago, Dinar said:

RELX PLC - RELX is the ticker

 

I've owned RELX (and its component companies) in the past. I am curious why you think it is attractive at this moment. 

[boilermaker75]

1 hour ago, abcd said:

I am curious on how the brokerage house charges interest, when you sell puts without having the cash balance in the account to support it, meaning you will have to use your margin to honor the put, when it is time.

 

No charge till you are put to. Only then are you on margin and charged interest. (Edit: It is like putting in a limit order to purchase a stock that will put you on margin. No interest charged till the order actually executes.)

 

When it is getting close to expiration and it looks like I might get put to, I will buy the put back and sell a further out put at the same strike price. This picks up additional premium and delays going on margin. till hopefully the put expires worthless. This works very well with BRKB. I have been writing puts on BRKB ever since the B shares became available and I have never had a trade where I have lost money. 

Edited November 2, 2021 by boilermaker75

[Dinar]

11 minutes ago, LC said:

 

I've owned RELX (and its component companies) in the past. I am curious why you think it is attractive at this moment. 

Growth on the top-line is accelerating, as the transition from print to digital is basically over, the hit to exhibitions business from Covid-19 is in the rear view mirror, and the main division - risk is growing.  So from 4% on the top line, to 5-6% on the top line, 6-7% on operating income and low double digit EPS growth between leverage and buy-backs.   Why did you sell?

[kab60]

$ABG and $MO