[Coronita]

Bet against them on Monday and doubled my portfolio in two days. Man I've been waiting for them to dive. I pulled out of my BSC puts prematurely yesterday with a 60% gain. Would have had 200% percent after today. Tomorrow should be fun if you look what happened to the Yen and NIKKEI in the last two days.

 

Capemen, My experience is that you can rarely time the option prices correctly. If you start thinking "if I only waited, I would have made 40+% more", the next time you buy options, you will mentally want to stay in longer than you probably should..And chances are your options will expire worthless. While you possibly could pass off buying/shorting stocks as an "investment", playing options is really gambling. You're not going to win every hand, and on the hand you want to win on.

 

[Coronita]

oops I forgot..One other thing… PUT options are very useful if you have a lot of company stock options that you want to hedge against.

For example, back in the heyday, I worked for a company that gave us $30/share options. When the stock hit about $250/share, I was still unvested, so I couldn’t cash out the company issued stock options. What I did was when the market price was $250/share, I bought the equivalant number of PUT contracts at a strike price of something lower (say $200/share) that expired 1-2 months out.

The reason being is because 1) a sell price of $50 less than current market plus a short expiration window meant the cost of the option wasn’t that much. 2) It offered some downward protection in case my company stock declined while I was still waiting to vest. I had to keep buying put options every few months, until i vested for a year, because for the first year, my company did well and the stock held pretty well, so my PUT options kept expiring worthless. But the few thousand dollars lost to expired PUT options was trivial relative the the options worth of the one issued by the company. Finally at the end of the first year, I exercised and sold my vested stock options for the first year at about $226/share, and continued to buy PUTs for the unvested portion the second year to hedge against the remaining unvested portion.

The second year i was there, my company’s stock cratered from $200ish down to $17, my company options were worthless, but my PUT options did just fine. (On top of that my company reissued stock options at $17 which over the next two years eventually cratered to $7).

Please note though, It’s not worth to do this if you are only issued a few company options (1000-2000) or the strike price of the companhy issued options are too close to the fmv of the current stock price, as the cost of the PUT options you buy will strip any profits you make from your company issued options. And you shouldn’t be gambling that your company will do bad. Afterall, if you know that, you shouldn’t be working there.

Also, some companies have strict company policies that says employees should NOT engage in trading derivatives of the company, though unless you’re a director/officer of the company or have insider data, it’s just a company policy, not a SEC policy. The workaround is to find a distant relative/trusted friend to buy the PUT options as a hedge against their own stock options. Also, you definitely shouldn’t do this regardless of what company policy there is if you’re a company officer,director, or have insider data….Chances are you will breach some SEC rule, and you don’t want to get a call from them.

[Coronita]

oops I forgot..One other thing… PUT options are very useful if you have a lot of company stock options that you want to hedge against.

For example, back in the heyday, I worked for a company that gave us $30/share options. When the stock hit about $250/share, I was still unvested, so I couldn’t cash out the company issued stock options. What I did was when the market price was $250/share, I bought the equivalant number of PUT contracts at a strike price of something lower (say $200/share) that expired 1-2 months out.

The reason being is because 1) a sell price of $50 less than current market plus a short expiration window meant the cost of the option wasn’t that much. 2) It offered some downward protection in case my company stock declined while I was still waiting to vest. I had to keep buying put options every few months, until i vested for a year, because for the first year, my company did well and the stock held pretty well, so my PUT options kept expiring worthless. But the few thousand dollars lost to expired PUT options was trivial relative the the options worth of the one issued by the company. Finally at the end of the first year, I exercised and sold my vested stock options for the first year at about $226/share, and continued to buy PUTs for the unvested portion the second year to hedge against the remaining unvested portion.

The second year i was there, my company’s stock cratered from $200ish down to $17, my company options were worthless, but my PUT options did just fine. (On top of that my company reissued stock options at $17 which over the next two years eventually cratered to $7).

Please note though, It’s not worth to do this if you are only issued a few company options (1000-2000) or the strike price of the companhy issued options are too close to the fmv of the current stock price, as the cost of the PUT options you buy will strip any profits you make from your company issued options. And you shouldn’t be gambling that your company will do bad. Afterall, if you know that, you shouldn’t be working there.

Also, some companies have strict company policies that says employees should NOT engage in trading derivatives of the company, though unless you’re a director/officer of the company or have insider data, it’s just a company policy, not a SEC policy. The workaround is to find a distant relative/trusted friend to buy the PUT options as a hedge against their own stock options. Also, you definitely shouldn’t do this regardless of what company policy there is if you’re a company officer,director, or have insider data….Chances are you will breach some SEC rule, and you don’t want to get a call from them.

[Coronita]

Options Cliff Notes version:

PUTS: are the opposite of CALLS. CALLS are right buy a stock at a given price. PUTS are rights to sell a stock at a given price.

An option’s price has a premium, which depends on several factors, some being the duration to expiration, the strike price’s nearness/farness to the current price of the stock, current volatility of the specifc security, etc.

As with an option, you have a choice to buy an option or write an option. If you buy PUTS, you’re betting the stock will decline.

Personally the only thing that I do major with options is write covered calls on stocks that I want to sell at a specific price. Considering that most options expire worthless or with exercise cost that exceeds the fmv of the stock price the day I’m assigned the option, it’s pretty much extra money of securities that I wanted to sell or that ain’t moving. So far for me, 70% of my written options expired worthless, 20 percent are exercised with a total cost that was more than if the people buy the stock themselves, and the remaining 10% are exercised at my lose (stock option stice price + option premium < market price of stock day I was assigned to option.) I have a much better track record doing this than when I use to buy calls or puts, when I was about 30% right and 70% wrong, and the 30% of the time being right never yielded more than the 70% of the time being wrong.

[Coronita]

Options Cliff Notes version:

PUTS: are the opposite of CALLS. CALLS are right buy a stock at a given price. PUTS are rights to sell a stock at a given price.

An option’s price has a premium, which depends on several factors, some being the duration to expiration, the strike price’s nearness/farness to the current price of the stock, current volatility of the specifc security, etc.

As with an option, you have a choice to buy an option or write an option. If you buy PUTS, you’re betting the stock will decline.

Personally the only thing that I do major with options is write covered calls on stocks that I want to sell at a specific price. Considering that most options expire worthless or with exercise cost that exceeds the fmv of the stock price the day I’m assigned the option, it’s pretty much extra money of securities that I wanted to sell or that ain’t moving. So far for me, 70% of my written options expired worthless, 20 percent are exercised with a total cost that was more than if the people buy the stock themselves, and the remaining 10% are exercised at my lose (stock option stice price + option premium < market price of stock day I was assigned to option.) I have a much better track record doing this than when I use to buy calls or puts, when I was about 30% right and 70% wrong, and the 30% of the time being right never yielded more than the 70% of the time being wrong.

[Coronita]

Vrudny,

Not to sound rude, but I wouldn’t count your chickens before they hatch first. You’re starting to sound like the homeowner that is saying he/she made $$$$ in 1months of equity appreciation without having cashed out to really take the gains. The stock market is really volatile these days, and its really anyone’s guess where things are headed imho.

For reference, days like today (yesterday) were like $50k losses for me. But fortunately, there hasn’t been many days like yesterday (yet). The real question is what happens in the markets moving forward. For me, it’s going to take a reversal of 2-3 years of appreciation undoing before things are considered losses. Again, I’m not saying it’s not possible, but to point I’m not counting on my sizable “appreciation” until i cash out, which is getting more enticing these days if these downward trends continue.

Anyway, I guess the point is. It doesn’t really matter what direction you are in the market, provided your timing is pseudo right. I would say if you went short 2 years ago, you’re probably still in the red despite the drop today, but that would be my guess. Just like if you entered long yesterday, you’re probably going to be red in the near short term.

[Coronita]

Vrudny,

Not to sound rude, but I wouldn’t count your chickens before they hatch first. You’re starting to sound like the homeowner that is saying he/she made $$$$ in 1months of equity appreciation without having cashed out to really take the gains. The stock market is really volatile these days, and its really anyone’s guess where things are headed imho.

For reference, days like today (yesterday) were like $50k losses for me. But fortunately, there hasn’t been many days like yesterday (yet). The real question is what happens in the markets moving forward. For me, it’s going to take a reversal of 2-3 years of appreciation undoing before things are considered losses. Again, I’m not saying it’s not possible, but to point I’m not counting on my sizable “appreciation” until i cash out, which is getting more enticing these days if these downward trends continue.

Anyway, I guess the point is. It doesn’t really matter what direction you are in the market, provided your timing is pseudo right. I would say if you went short 2 years ago, you’re probably still in the red despite the drop today, but that would be my guess. Just like if you entered long yesterday, you’re probably going to be red in the near short term.

[Coronita]

SD Realtor. Please don’t be frustrated. I’m monitoring your numbers regularly. Thanks for the updates. I only wish you would expand your data to the attached markets, but that’s ok.

BTW: looks like the one attached that I bookmarked went pending last week.

http://piggington.com/ouch_1_month_later_still_no_takers_on_this_cv_townhome

Any ideas on MLS #076022906 ? Looks like it went pending. Drat! Guess it was wishful thinking I’d be able to re-pick up that place for less than $500k.

[Coronita]

SD Realtor. Please don’t be frustrated. I’m monitoring your numbers regularly. Thanks for the updates. I only wish you would expand your data to the attached markets, but that’s ok.

BTW: looks like the one attached that I bookmarked went pending last week.

http://piggington.com/ouch_1_month_later_still_no_takers_on_this_cv_townhome

Any ideas on MLS #076022906 ? Looks like it went pending. Drat! Guess it was wishful thinking I’d be able to re-pick up that place for less than $500k.

[Coronita]

Quite possible.

BUT before each of you go off and celebrate the the economy is going to crash, and that you think you’re going to now be able to buy an affordable house…You might want to double check where you are on the economic/job food chain. Some will get hit first and harder than others, and it really depends on where you are on the food chain.

[Coronita]

Quite possible.

BUT before each of you go off and celebrate the the economy is going to crash, and that you think you’re going to now be able to buy an affordable house…You might want to double check where you are on the economic/job food chain. Some will get hit first and harder than others, and it really depends on where you are on the food chain.

[Coronita]

Lonestar I agree with you and am in the same boat. However I have seen more then one post with some fairly cavalier statements about the recession. Things like bring it on, and I can't wait for it. Statements such as these are obviously made with little thought. SD Realtor

 

I would say that a big recession would probably hurt most of the piggington's on this board. The only exceptions would be those that don't depend on jobs but are independently wealthy and have what I call enough F.U. money. Although I know a lot of other people would get hurt before us,I'm not hoping for a big correction,The point is, everyone (almost) will get hurt. Anyway, be careful what you wish for.

 

[Coronita]

Lonestar I agree with you and am in the same boat. However I have seen more then one post with some fairly cavalier statements about the recession. Things like bring it on, and I can't wait for it. Statements such as these are obviously made with little thought. SD Realtor

 

I would say that a big recession would probably hurt most of the piggington's on this board. The only exceptions would be those that don't depend on jobs but are independently wealthy and have what I call enough F.U. money. Although I know a lot of other people would get hurt before us,I'm not hoping for a big correction,The point is, everyone (almost) will get hurt. Anyway, be careful what you wish for.

 

[Coronita]

How many times have you heard that lately from the same friends who chastised you several years ago when you sold and rented? I've got a dozen homeowning friends who have each seen their SD properties fall a hundred grand or more in equity.

 

So I'm curious.  How many "years" since you sold have you rented and how much was your rent. If say, you sold 5-6 years ago, are you expecting the home price to fall below your purchase. Also, how much was rent during those years? Just curious.

[Coronita]

How many times have you heard that lately from the same friends who chastised you several years ago when you sold and rented? I've got a dozen homeowning friends who have each seen their SD properties fall a hundred grand or more in equity.

 

So I'm curious.  How many "years" since you sold have you rented and how much was your rent. If say, you sold 5-6 years ago, are you expecting the home price to fall below your purchase. Also, how much was rent during those years? Just curious.

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