OFFICIAL STOCK MARKET & ECONOMY THREAD VOL. SCHOOL'S OUT

[omgitswes]

How did you guys get started with this? I've been interested in finance for the last few years and I'm just as lost now as when I first started reading into it.
I have about one grand that I'm able to play around with, but still really hesitant to get started. Anyone have any literature for me to read over how to get started trading, or if there are already posted link me to it

 

[johnnyredstorm]

The Intelligent Investor by Benjamin Graham.

 

[omgitswes]

Thank you sir.
I think I'm going to start a scottrade account, does anyone on here use it?

 

[lazyj10]

Originally Posted by JohnnyRedStorm

The Intelligent Investor by Benjamin Graham.

Good book, however, it's extremely dry for those who haven't read it....Even the newer versions w/ forward and chapter commentary by others.

  

 

[freakydestroyer]

My favorite is Stan Weinstein's Secrets For Profiting in Bull and Bear Markets.

 

[freakydestroyer]

Originally Posted by bruce negro

Originally Posted by omgitswes

Originally Posted by bruce negro


Perhaps. Definitely not quarterly, though.

The company said it would begin giving shareholders a quarterly dividend of $2.65 per share sometime its fiscal fourth quarter, which begins in July. Apple last offered a dividend in 1995.

 Got me. I believe they're only going to do it for a few years, I don't think they're going to become a true dividend stock just yet. 
But alright people, I need some clarification.

So I've been researching options in-depth for the past week or so, although I've already known the principles behind them for a while. I just need some confirmation on a few points.

• The value of, say, a call option is the price you want to sell the stock at less the strike price, multiplied by the amount of shares that your option held, correct? For example, if I buy one call option (containing 100 shares) of BAC with a strike price at $11 and BAC reaches $14 by the time my contract is up, the value of my option would be calculated as (14-11)*100, and then I must also subtract the fee I paid for the option from that answer, correct?

• Assuming I'm correct on the above, doesn't that mean that you will most likely LOSE money on an option buy if the difference between the current price and the strike price is less than a dollar? Like, (11.5-11)*100 would be $50, correct? Unless you bought the option at $.50> then you're not going to get a profit at all, not counting the other fees. 

• Therefore, the only really wise option buys, aside from using certain option buying strategies like butterfly spreads and others, would be to purchase an option on those penny-stock-like opportunities, like some pharmaceutical stocks, where the increase or decrease will span a significant amount of dollars. amirite?

If so, then could someone recommend me some interesting pharmaceutical picks, or tell me where to find them? I'm not going to get into options for a while unless something really jumps out at me, but I'm curious as to how pharmaceutical stocks are priced, option-wise. I'm assuming that because there's such a possibility of fast-growth that their option spreads would be priced high in all areas, but I also want to know if there are other factors. Just trying to understand a bit more.


In a nutshell that's what happens. But do more reading. There's other factors too such as time value. Near expiration, this can drop FAST.

 

[lazyj10]

Originally Posted by bruce negro


But alright people, I need some clarification.

So I've been researching options in-depth for the past week or so, although I've already known the principles behind them for a while. I just need some confirmation on a few points.

• The value of, say, a call option is the price you want to sell the stock at less the strike price, multiplied by the amount of shares that your option held, correct? For example, if I buy one call option (containing 100 shares) of BAC with a strike price at $11 and BAC reaches $14 by the time my contract is up, the value of my option would be calculated as (14-11)*100, and then I must also subtract the fee I paid for the option from that answer, correct?

• Assuming I'm correct on the above, doesn't that mean that you will most likely LOSE money on an option buy if the difference between the current price and the strike price is less than a dollar? Like, (11.5-11)*100 would be $50, correct? Unless you bought the option at $.50> then you're not going to get a profit at all, not counting the other fees. 

• Therefore, the only really wise option buys, aside from using certain option buying strategies like butterfly spreads and others, would be to purchase an option on those penny-stock-like opportunities, like some pharmaceutical stocks, where the increase or decrease will span a significant amount of dollars. amirite?

If so, then could someone recommend me some interesting pharmaceutical picks, or tell me where to find them? I'm not going to get into options for a while unless something really jumps out at me, but I'm curious as to how pharmaceutical stocks are priced, option-wise. I'm assuming that because there's such a possibility of fast-growth that their option spreads would be priced high in all areas, but I also want to know if there are other factors. Just trying to understand a bit more.

The value of your calls (less all broker fees, obviously) is contract purchase less the sale of the contracts x 100.  For example

Company X's January 2013 $10 calls trade at $.50 which you purchased at.  You bought 5 contracts, which is eqaul to 500 shares (100 x 5) at the $0.50.  Let's say it cost you 10.95, so you're in at $260.95.

The calls, before expiration, increase to $2 and you sell.  Your gain is calculated at $2 -$0.50 x 5 x 100 = $750, less the $10.95 to sell, net to you $739.05.

The original $.50 cents is calculated in part on obvious market factors and time, due to the fact they can expire worthless.  



  

 

[theone218]

Just curious what is everyone's thoughts on Kodak?

 

[bruce negro]

Originally Posted by LazyJ10

Originally Posted by bruce negro


But alright people, I need some clarification.

So I've been researching options in-depth for the past week or so, although I've already known the principles behind them for a while. I just need some confirmation on a few points.

• The value of, say, a call option is the price you want to sell the stock at less the strike price, multiplied by the amount of shares that your option held, correct? For example, if I buy one call option (containing 100 shares) of BAC with a strike price at $11 and BAC reaches $14 by the time my contract is up, the value of my option would be calculated as (14-11)*100, and then I must also subtract the fee I paid for the option from that answer, correct?

• Assuming I'm correct on the above, doesn't that mean that you will most likely LOSE money on an option buy if the difference between the current price and the strike price is less than a dollar? Like, (11.5-11)*100 would be $50, correct? Unless you bought the option at $.50> then you're not going to get a profit at all, not counting the other fees. 

• Therefore, the only really wise option buys, aside from using certain option buying strategies like butterfly spreads and others, would be to purchase an option on those penny-stock-like opportunities, like some pharmaceutical stocks, where the increase or decrease will span a significant amount of dollars. amirite?

If so, then could someone recommend me some interesting pharmaceutical picks, or tell me where to find them? I'm not going to get into options for a while unless something really jumps out at me, but I'm curious as to how pharmaceutical stocks are priced, option-wise. I'm assuming that because there's such a possibility of fast-growth that their option spreads would be priced high in all areas, but I also want to know if there are other factors. Just trying to understand a bit more.

The value of your calls (less all broker fees, obviously) is contract purchase less the sale of the contracts x 100.  For example

Company X's January 2013 $10 calls trade at $.50 which you purchased at.  You bought 5 contracts, which is eqaul to 500 shares (100 x 5) at the $0.50.  Let's say it cost you 10.95, so you're in at $260.95.

The calls, before expiration, increase to $2 and you sell.  Your gain is calculated at $2 -$0.50 x 5 x 100 = $750, less the $10.95 to sell, net to you $739.05.

The original $.50 cents is calculated in part on obvious market factors and time, due to the fact they can expire worthless.  



  

Ok, so you're basing the gain on the updated call price at the time I wish to sell the contract, not on the stock price itself. Gotcha~ Is that a standard practice? From what I've read, it's usually a matter of Market Price less your Strike Price, not the Current Value of a contract less the Price at Which You Purchased the Contract. That said, I guess it's fairly safe to assume that you'd still come to a similar price as the contract prices reflect the stock's price and how it moves in the market, but there could definitely still be some discrepancies.
I actually just finished reading the chapter that I'd started when I posted my understanding of options in my above post. Just checked out the Black-Scholes Option Pricing Model... 

 Very interesting. The resources a bank can grant you when you're interning in Financial Management... I'm gonna read all of these damn books 

 

[lazyj10]

Don't confuse strike price and call - call just relates to the option to buy the underlying stock price should you chose to (i.e - BAC at $10) versus the market price for the contracts.

I'm talking gains, versus, valuation, though...not sure which you're asking about?

Bloomberg has a options pricing model, which does the heavy lifting...you can base it on the historic volatility of the underlying equity or customize. Volatility and Time affect the option price significantly, with ITM/OTM trailing.

 

[nocomment6]

Originally Posted by theone218

Just curious what is everyone's thoughts on Kodak?

Just took a quick look, well it doesn't look too good. Although the 5 day MA should cross the 20 day MA, so this may suggest a slight turn in trend a trend, with resistance at .4 and 1.1 if I'm not mistaken.  MACD's negative, which isn't good, it still suggests a negative trend. However it does seem as though volatility will be small and it may turn into a rising trend. This is based only upon the chart, I don't know much about whats going on in the company itself....
More info on options would be appreciated! (Oil is traded as an option, right? Is that true for gold as well?)

 

[freakydestroyer]

AMZN is getting wind again. I would buy now. 

 

[freakydestroyer]

Originally Posted by nocomment6

Originally Posted by theone218

Just curious what is everyone's thoughts on Kodak?

Just took a quick look, well it doesn't look too good. Although the 5 day MA should cross the 20 day MA, so this may suggest a slight turn in trend a trend, with resistance at .4 and 1.1 if I'm not mistaken.  MACD's negative, which isn't good, it still suggests a negative trend. However it does seem as though volatility will be small and it may turn into a rising trend. This is based only upon the chart, I don't know much about whats going on in the company itself....
More info on options would be appreciated! (Oil is traded as an option, right? Is that true for gold as well?)

Futures, unless you are talking about gold and oil stocks or ETFs.

 

[36 ounces]

Does anyone use sogotrade?

 

[nocomment6]

yeah amazon also seems good!

yeah, futures, my bad.

 

[bruce negro]

Originally Posted by LazyJ10

Don't confuse strike price and call - call just relates to the option to buy the underlying stock price should you chose to (i.e - BAC at $10) versus the market price for the contracts.

I'm talking gains, versus, valuation, though...not sure which you're asking about?

Bloomberg has a options pricing model, which does the heavy lifting...you can base it on the historic volatility of the underlying equity or customize. Volatility and Time affect the option price significantly, with ITM/OTM trailing.

Nah, I know the distinction, I'm mainly just asking about how the option tables look on stocks in different sectors. Like, pharmaceutical stocks can sometimes double or triple in a matter of months, so I'm wondering what their tables would look like versus a stock that doesn't have such volatility potential. Talking about the calculation of the worth of your option, I was saying that instead of your method, I thought that it was calculated by subtracting the current by price of the stock less the strike price that the option was purchased at, multiplied by amount of shares in the option. Not saying yours is wrong, because I'm not sure, but I'm just saying what I read in a textbook.

 

[bruce negro]

Originally Posted by freakydestroyer

Originally Posted by nocomment6

Originally Posted by theone218

Just curious what is everyone's thoughts on Kodak?

Just took a quick look, well it doesn't look too good. Although the 5 day MA should cross the 20 day MA, so this may suggest a slight turn in trend a trend, with resistance at .4 and 1.1 if I'm not mistaken.  MACD's negative, which isn't good, it still suggests a negative trend. However it does seem as though volatility will be small and it may turn into a rising trend. This is based only upon the chart, I don't know much about whats going on in the company itself....
More info on options would be appreciated! (Oil is traded as an option, right? Is that true for gold as well?)

Futures, unless you are talking about gold and oil stocks or ETFs.

Yep. Oil can also be traded as a forward contract, which means that there is usually a physical delivery of the underlying asset. Southwest actually made a killing in oil forward contracts, because they were able to purchase the oil at a price that was lower than the current market value at the end of their contracts. Futures and forwards are the same thing, but forwards usually require physical delivery of the underlying asset, futures are usually settled with cash.

 

[secretzofwar]

Anyone here subscribe to Tiiiiiimmmmmmmmmmmmmmy Sykes?

 

[freakydestroyer]

Originally Posted by secretzofwar

Anyone here subscribe to Tiiiiiimmmmmmmmmmmmmmy Sykes?

If money isn't my motive, then I would sign up.

 

[dajoka004]

I do not like AMZN as a buy and hold. Maybe a short term play, but I'm talking very short term. Apple is going to drive them into the ground if the release a 7-8 inch mini iPad, which reports have them doing so later this year. AMZN is one of the most overhyped companies today. What are they doing that would make anyone want to buy? God forbid the government throws the noose on their tax dodging tactics at some point.

 

[freakydestroyer]

Amazon is the world's largest online retailer. They've made some major acquisitions the past few years- Zappos, Woot, Lovefilm, etc. Most recently Kiva systems. The Kindle is not supposed to compete with the iPad, it's more for eBooks and brand recognition. I do agree that AMZN probably isn't the best long term play. It will probably reach its intrinsic value in a reasonable time. But I wouldn't limit it to just a quick trade either, I think it can rally for longer than that. 

 

[nocomment6]

Originally Posted by bruce negro

Originally Posted by freakydestroyer

Originally Posted by nocomment6


Just took a quick look, well it doesn't look too good. Although the 5 day MA should cross the 20 day MA, so this may suggest a slight turn in trend a trend, with resistance at .4 and 1.1 if I'm not mistaken.  MACD's negative, which isn't good, it still suggests a negative trend. However it does seem as though volatility will be small and it may turn into a rising trend. This is based only upon the chart, I don't know much about whats going on in the company itself....
More info on options would be appreciated! (Oil is traded as an option, right? Is that true for gold as well?)

Futures, unless you are talking about gold and oil stocks or ETFs.

Yep. Oil can also be traded as a forward contract, which means that there is usually a physical delivery of the underlying asset. Southwest actually made a killing in oil forward contracts, because they were able to purchase the oil at a price that was lower than the current market value at the end of their contracts. Futures and forwards are the same thing, but forwards usually require physical delivery of the underlying asset, futures are usually settled with cash.

Thanks is this valid for gold to?
I never quite understood how I could buy gold as an investment.

 

[paycheck26]

I dont post in this thread much at all, but i look every now and then. Whats you stand on Frontier Communications Corp (FTR)? It has a pretty high yield, im looking for a short term stock though.

 

[joe billionaire]

Originally Posted by DaJoka004

I do not like AMZN as a buy and hold. Maybe a short term play, but I'm talking very short term. Apple is going to drive them into the ground if the release a 7-8 inch mini iPad, which reports have them doing so later this year. AMZN is one of the most overhyped companies today. What are they doing that would make anyone want to buy? God forbid the government throws the noose on their tax dodging tactics at some point.

have you ever bought anything on amazon? you sound too in love with apple 

 but i wouldn't blame you if they make you money 
amazon has great customer service thats why i buy from them...even if they charge tax it would just mean more people would shell out the 80$ and get amazon prime to get free 2 day shipping which would still make it better than anyone on the net...that same 80$ gives you access to their moving streaming which shows the same content as netflix is actually cheaper yearly than what you pay for netflix 

kindle fire took sales away from apple and thats the only reason they talked about making a smaller ipad...but amazon is releasing a 10inch quad core tab later this year if its cheaper than 499 you can bet it will be multi million sales just like the fire

i dont have amazon stock, and im buying an ipad, the ipad is the only apple product amazon doesn't sell tho wish it did 

 

[dajoka004]

Originally Posted by Joe Billionaire

Originally Posted by DaJoka004

I do not like AMZN as a buy and hold. Maybe a short term play, but I'm talking very short term. Apple is going to drive them into the ground if the release a 7-8 inch mini iPad, which reports have them doing so later this year. AMZN is one of the most overhyped companies today. What are they doing that would make anyone want to buy? God forbid the government throws the noose on their tax dodging tactics at some point.

have you ever bought anything on amazon? you sound too in love with apple 

 but i wouldn't blame you if they make you money 
amazon has great customer service thats why i buy from them...even if they charge tax it would just mean more people would shell out the 80$ and get amazon prime to get free 2 day shipping which would still make it better than anyone on the net...that same 80$ gives you access to their moving streaming which shows the same content as netflix is actually cheaper yearly than what you pay for netflix 

kindle fire took sales away from apple and thats the only reason they talked about making a smaller ipad...but amazon is releasing a 10inch quad core tab later this year if its cheaper than 499 you can bet it will be multi million sales just like the fire

i dont have amazon stock, and im buying an ipad, the ipad is the only apple product amazon doesn't sell tho wish it did 

That's all nice. There is a major difference between a good company for the consumer and a good company for the investor. Invest in Amazon and their Q4 $117 million profit, their TTM of 140, future P/E of 72 and PEG of 4.79. FOUR POINT SEVEN NINE. That's a company I want no part of. Show me where Amazon is going to profit from, thus making those numbers of massive future growth reasonable. Because all I see is a company that is playing the tablet game by selling the Fire at a loss and banking on customers, CHEAP customers, to make up for the loss by buying content. How many Kindle Fires have they sold? Oh, I forgot it's all speculation because Amazon doesn't release numbers like that.I just got my options account approved. I'll back my talk up with LEAPS against AMZN once I get a good chance to sit down and look everything over.And yes, I enjoy Apple as a consumer and investor. The moment I see Apple's future start to dim is the moment I'll dump them. I love money, not AAPL.