I think his point was "if you are going to trim anyways". In which case I could have just trimmed prior to the dip.
OT: Stock and Investment Talk
- Thread starter RU-05
- Start date
You guys are both correct. Writing covered calls when you expect the stock to go up will limit upside potential and probably result in missed opportunity cost.
The ONLY reason you write cover calls is to collect the perm. If you are writing naked calls, you are taking directional risk.
If your talking covered calls that's different, but selling a call reduces value as stock price increases.
Edit: and that's a pretty dick response considering I wasn't the one wrong
I personally consider missed opportunity cost as a loss.
I thought he said he wanted to trim only at a higher stock price.
Agreed. To write naked calls, you have to have a very strong conviction that the stock is not going up.
Yes, writing naked calls is essentially a short position with limited upside.
It is interesting the different perception the WSB's crowd has on stock issuance compared to traditional WS.
WS see's it as dillution and reason for the per share price to come down. WSB see's it as good for the company and thus reason for the share price to go up. Are they just rationalizing anything that happens as positive? Maybe but it is true that if AMC had any hope of surviving they needed to raise cash, and they are doing that.
Granted nothing can rationalize the current share price of AMC, but just the general perception of these stock issuances as good can be rationalized. .
They track WSB stock mentions nowadays and last week they were saying BB was the 2nd most mentioned stock.
It was at $10. I didn't buy. It's at $19.
I'm def not trying to chase it now, but I was wary of chasing even when it was at $12 early in the week.
Oh well, at least I've got TELL ripping and that has a fundamental case behind it. $12B deal announced this morning actually.
It was at $10. I didn't buy. It's at $19.
I'm def not trying to chase it now, but I was wary of chasing even when it was at $12 early in the week.
Oh well, at least I've got TELL ripping and that has a fundamental case behind it. $12B deal announced this morning actually.
I think you understand what you are doing 05. I agree with you that if you think that a stock has had a good run, has maybe a little left, why not get paid an option premium to sell it at an even higher price. If it doesn't reach that price over the defined time period, you pocket the premium. If it does, you get the defined strike price, but forego further appreciation. One other consideration is that the call option will not be executed as soon as it reaches the strike price. Makes no sense as there is still time value to the holder. So, you may end up in the position where the stock is trading well above where you are willing to sell it, but you don't want to become naked by selling the underlying stock, and then bad news hits and the stock dives before the option expires. You keep the premium obviously, but missed the opportunity to sell at an attractive price. To get around this, you would need to close out the call option before expiration which would be buying the same call option which would require you paying a premium. My only advice is don't go naked.
They are issuing more shares. Smart move by mgmt but hurts current equity holders.
Is it a short squeeze or a equity raise? LOL
Can’t be a short squeeze when the company is issuing stock like the dot com era.
Honestly, if you're looking to a message board for this info, you may as well light your money on fire and save yourself the middlemen.
The short squeeze is only part of the story obviously. It was much more of a story with GME when it was short 140% of the float or whatever % it was. But it's grown into more then just squeezing the shorts. Not that any of it is all that smart.
But you are right, and I didn't really consider it, that by issuing stock they are lowering the % of stocks which are short, and thus relieving pressure on the shorts.
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Ya, just looking to dip a toe in currently. Thanks on the 1st bold, that was a question I had. And thanks on the 2nd bold as that was something I had not considered. Going naked seems like something I would never get into.
Sold PDD at a loss. Still own Baba, but these guys are stuck in the mud.
Bought DNMR. Biodegradable plastics. Only recently went revs. Expensive now on p/s but mega growth expected. Expected to go profitable in a couple years. 2.2B market cap. Up 67% off it's recent bottom so I'm late, but still 55ish % off it's Feb highs, so maybe not too late.
Bought DNMR. Biodegradable plastics. Only recently went revs. Expensive now on p/s but mega growth expected. Expected to go profitable in a couple years. 2.2B market cap. Up 67% off it's recent bottom so I'm late, but still 55ish % off it's Feb highs, so maybe not too late.
You're right.
Opening option positions means you place the order at the beginning of the day, closing option positions means you place the order at the end of the day.
Carry on
I’m sure the SEC could put together a manipulation case. There is only 1 reason the WSB crew is working in concert and that’s to drive the price up and screw whichever idiot is left holding the bag. GameStop = dying B&M store chain…AMC = struggling theater chain…BBBY = struggling retailer. If the WSB crew was actually interested in making investments they don’t need an army. FWIW, I don’t care about it one way or another but I think it’s bad for the market. Just like the Roaring Kitty nonsense. He could have bought GameStop and kept his mouth shut. But he decided to jump all over the internet for the sole purpose of driving up the price.
Wait until a “wolf in sheep’s clothing” redditor organizes this crew to stage a proxy contest.
I getcha. The WSB "individual investors" aren't really covered by SEC/FINRA rules, but the firms they trade through are subject to them. Regulators are more likely to fine Robin Hood for market manipulation than the individuals. Personally, I'm curious to see the mechanics of how these partial share orders are filled outside of market hours and how the firm accounts for margin vs cash accounts.
But it's also cool to see the small guys making a killing trying to screw over the big guys. LOL.
The AMC CEO has done the right thing to date. Issue shares when priced well beyond intrinsic value and use the proceeds to reduce debt and make any needed capital expenditures to the company’s existing asset base. If the shares continue to stay at these prices, he should keep issuing and use the cash to fund acquisitions to diversify away from what I think is an industry in secular decline. One of the least appreciated roles of a CEO is capital allocation. This should result in a HBS case study in capital allocation, similar to the famed Henry Singleton.
Just wondering base on some of your earlier responses, do you work in the industry?
He’s definitely done the right thing for AMC but there will be a lot of individual investors that get burned. But, that’s on them.
Yes, I work for a firm in the financial industry. Mostly getting the morning coffee for the smart guys though. lol
Tesla with a quick drop of 4% over the last hour. Somebody dumping their shares? But, volume does not seem out of whack.
Ford up big (over 7%) on relatively high volume. Not shocked with the TSLA slide this year as it was grossly overvalued, but very pleased (and surprised) with big the Ford rally. With a cost basis below $8, I’m thinking of taking some off the table.
Ford up big (over 7%) on relatively high volume. Not shocked with the TSLA slide this year as it was grossly overvalued, but very pleased (and surprised) with big the Ford rally. With a cost basis below $8, I’m thinking of taking some off the table.
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You really need to read a beginner’s book on options. Very difficult to reach options trading over a message board. Open/close have nothing to do with market open close. It relates to opening and closing your position.
Tesla shares drop on report of steep May sales decline in China
Investors were shaken by a single-sourced report that Tesla net orders in China had nearly halved between April and May.
I hear what you guys are saying, but this board allows me to find answers to questions as I happen upon them.
And look my first options trade isn't going to be a couple hundred naked call options of AMC.
It's going to be an inconsequential trade which I might earn a $50 premium on in a couple weeks. v
Now could guys be pulling my chain, or just plain wrong(not sure where RuJohnny falls above)? Ya, for sure, but I've gotten some pretty good info here over the last year so I'm willing to throw the question out there and see what comes back.
My first dozen or so option trades were on paper, so I could see the mechanics of how it worked in a volatile market before risking actual capital.
You're betting on a market direction in a certain timeframe. It's basically craps.
You mean the ones who bought yesterday and are now down 28%. Or the GME buyers down 14%?
AMC was down 30%, then up 10%, and ended down 18%. What fun! :)
Raised a ton of money:
AMC says it has already completed share offering, raises $587 million
AMC sold 11.55 million shares at an average price of approximately $50.85 per share in an at-the-market equity program launched earlier Thursday.
