|
stickykeys posted:What's to stop someone buying a load of shares before the ex-dividend date and selling them right after just to get a divident payment? The stock price drops by the amount of the dividend.
|
#
?
Jan 21, 2016 19:29
|
|
|
|
| # ? Jun 8, 2024 02:09 |
|
|
stickykeys posted:What's to stop someone buying a load of shares before the ex-dividend date and selling them right after just to get a divident payment? Nothing, but mathematically when a stock pays out dividends its value drops by exactly the dividend amount. This effect gets muddled in the variations of the market, but it is true. The company paid out cash, therefore the company has fewer assets and is worth less.
|
|
#
?
Jan 21, 2016 19:30
|
|
|
quote:What's to stop someone buying a load of shares before the ex-dividend date and selling them right after just to get a divident payment? In theory, the price should dip by the amount of the dividend. In practice, you don't consistently see that, and I think if you really worked at it you could make money this way. I tried doing this on paper for a while with QYLD and a couple other high-dividend index funds. For the return it generated (and it did work overall I think, though quantifying it is hard when there's such volatility in underlying price anyway), it was going to be too much work - and for lots of the target stocks, there wouldn't be enough liquidity for you to try it with a ton of money. jmzero fucked around with this message at 19:50 on Jan 21, 2016 |
|
#
?
Jan 21, 2016 19:37
|
|
|
jmzero posted:In theory, the price should dip by the amount of the dividend. In practice, you don't consistently see that, and I think if you really worked at it you could make money this way. I tried doing this on paper for a while with QYLD and a couple other high-dividend index funds. For the return it generated, it was going to be too much work - and for lots of the target stocks, there wouldn't be enough liquidity for you to try it with a ton of money. The stock exchange manually adjusts the quote of the previous day's closing trade and the bid and ask of all outstanding orders by the dividend amount. So it's not 'should dip' like you expect the market to react rationally, but that there is somewhat of an action taken. In a bull market, you do often see the stock bouncing back up to pre-payout prices quite fast.
|
|
#
?
Jan 21, 2016 19:41
|
|
|
Pretty sure the amount you get is prorated, is it not?
|
|
#
?
Jan 21, 2016 19:44
|
|
|
jmzero posted:In theory, the price should dip by the amount of the dividend. In practice, you don't consistently see that, and I think if you really worked at it you could make money this way. I tried doing this on paper for a while with QYLD and a couple other high-dividend index funds. For the return it generated (and it did work overall I think, though quantifying it is hard when there's such volatility in underlying price anyway), it was going to be too much work - and for lots of the target stocks, there wouldn't be enough liquidity for you to try it with a ton of money. Your expected return from this strategy over the long term is exactly equal to the expected return from (buy/hold - commissions). So for dividend stocks, probably something like 2-3%. So yah, you can make money.
|
|
#
?
Jan 21, 2016 19:45
|
|
|
Rurutia posted:In a bull market, you do often see the stock bouncing back up to pre-payout prices quite fast. edit: PITR crew ITT edit2: vvvv oh okay, that's surprising. Blinky2099 fucked around with this message at 19:51 on Jan 21, 2016 |
|
#
?
Jan 21, 2016 19:45
|
|
|
Blinky2099 posted:Presumably at the same rate as the rest of the stock market, right? I don't see why this matters/is surprising. No, I feel like since I noted it this would be obvious. As in a lot of times, it'll be back to the stock price by the end of day, no matter what the rest of the market is doing. Bull market meaning general trend of the market at the time. But it really doesn't matter nowadays. As jmzero says, it used to be a play that quickly now is not worth it.
|
|
#
?
Jan 21, 2016 19:48
|
|
|
Leperflesh posted:If you're thinking about investing for the long term, you might want to visit the long-term investing and retirement savings thread. There, you will be advised to avoid individual stocks, and maybe put your money into a diversified investment such as a low-cost passively managed index-based mutual fund. I have a long term focused portfolio consisting of individual stocks. I do this because I like managing my holdings and getting involved with the companies I own, rather than just handing over my money to a financial firm for an annual fee and forgetting about it. ETFs are helpful, and I have a lot of my money in them as well, but they are not the be all, end all when it comes to investing. Diversifying your own portfolio is quite a reasonable thing to do, however you just have to put the effort into it as you indicated. Don't buy XOM today and not look at it for 5-6 years, expecting it to have doubled. Like I have said many times before, there are a lot of different strategies to investing in between putting all your assets in an index fund on one end, and buying ridiculous speculative stocks like SUNE and MCZ on the other.
|
|
#
?
Jan 21, 2016 19:52
|
|
|
Guinness posted:Nothing, but mathematically when a stock pays out dividends its value drops by exactly the dividend amount. This effect gets muddled in the variations of the market, but it is true. The company paid out cash, therefore the company has fewer assets and is worth less. This is what I read before but isn't the stock price the amount people are willing to trade at? I don't understand why after a dividend people will react to that by deciding to trade at a lower price, wouldn't they have already anticipated the dividend payment well in advance of it being paid/announced?
|
|
#
?
Jan 21, 2016 20:25
|
|
|
stickykeys posted:This is what I read before but isn't the stock price the amount people are willing to trade at? I don't understand why after a dividend people will react to that by deciding to trade at a lower price, wouldn't they have already anticipated the dividend payment well in advance of it being paid/announced? There's a specific date, usually a day or a few days before the payout, at which the shareholders-of-record are locked in, and after that date you can't buy the stock and get the dividend payout. The payout of the dividend is priced into the stock on that date. However, the rest of the time, anticipation of the dividend isn't a 100% thing, because a company could cancel or reduce their dividend at any time before that date. So, the market (presuming efficiency, etc. etc.) anticipates a dividend in the future, discounted by factors like how far into the future the dividend date is, and how big of a risk the market thinks it is that the company might reduce or outright skip a dividend payment. The book value of a company is a very significant factor in determining its valuation. So, the market presumably should adjust its valuation of the company when, on payment of a dividend, its book value necessarily drops by the cash value of that dividend payout. However, the payout of a dividend is usually taken as a sign of health of that company; that is, since it didn't miss this dividend payout, the company is presumably doing well, making profits, etc. That constitutes "good news," and the market tends to reward good news by bidding up the value of a company's stock. Consequently, it's pretty normal for a company's stock price to get bid up fairly quickly after it pays out a dividend. But all of this is tempered and sometimes completely overshadowed by other factors. A company in trouble might be desperately paying out dividends it can't really afford, to placate the shareholders. A company being badly mismanaged might be paying out dividends when it really ought to be using that cash to reinvest, so perhaps it's surrendering market share or missing major market opportunities. And if the company is operating in an industry in trouble, or if the stock market as a whole is going down (which happens all the time, on news that affects whole markets and whole economies), the stock of a dividend-paying company could be plunging on any given day regardless. It's not really possible to perfectly slice up a stock's rise or fall at any given moment among all of the possible influences acting on it. So, while we can say that in theory a stock price should always drop by exactly the percentage of the company's book value that its dividend payment represents, and since dividend payout happens while the market is closed an exchange will lower the opening bid/ask by exactly that amount vs. the previous close, in practice the market will usually immediately diverge from that price. Cheesemaster200 posted:I have a long term focused portfolio consisting of individual stocks. I do this because I like managing my holdings and getting involved with the companies I own, rather than just handing over my money to a financial firm for an annual fee and forgetting about it. ETFs are helpful, and I have a lot of my money in them as well, but they are not the be all, end all when it comes to investing. Diversifying your own portfolio is quite a reasonable thing to do, however you just have to put the effort into it as you indicated. Don't buy XOM today and not look at it for 5-6 years, expecting it to have doubled. My personal expectation is that your strategy will underperform a long-term strategy that utilizes low-fee passive index funds, after adjusting for risk premium. But, my position is certainly not universal, and that means your position and advice is certainly also valid. For that particular poster, who was contemplating selling some magic cards to buy one stock and hold it for 30 years, I think we both agree that your approach wasn't the best option to recommend. In particular I'm not sure if he was even aware of tax-advantaged options for long-term investing. Leperflesh fucked around with this message at 20:52 on Jan 21, 2016 |
|
#
?
Jan 21, 2016 20:48
|
|
|
So, the stock market is quantum mechanics. Got it.
|
|
#
?
Jan 21, 2016 20:50
|
|
|
stickykeys posted:What's to stop someone buying a load of shares before the ex-dividend date and selling them right after just to get a divident payment? One weird trick a something awful poster uses to make cash at home. Wall Street hates him.
|
|
#
?
Jan 21, 2016 21:00
|
|
|
There is a little oddball stock, ENZN, that is a one man company. Short version of the story is that it was a pharmaceutical company, it sold a drug then closed up shop but has remaining royalties from that drug. So now it is a one person company that pays out a rather large special dividend on an irregular basis and is played by a lot of retarded penny stock types. The interesting thing about ENZN is that special dividends have special rules, and it seems to confuse everyone. Buying 3 days before the dividend pays (you actually want to buy a bit after the dividend is announced, because people get confused about the exdiv date and sell, creating a rather large drop), you still get the dividend (i.e. the ex-div date is actually the day *after* the dividend pays when the dividend is greater than 25% of the share price) and can sell the day after. This is extremely profitable for reasons I admittedly don't fully understand, but Carl Icahn and some other big names hold this stock for that reason. I've played it twice now and it's like magic money. I haven't had the balls to put any real coin into it, but its interesting to watch what I believe is a complete market inefficiency due to a combination of tiny market cap and idiotic speculators. The stock drops, but not nearly as much as it should and in the case of the latest dividend on Dec 30th my dividend was 60% higher than the loss I took when I sold the shares after collecting the dividend. And I did it in a retirement account, so no taxes. I'm not going to play it next time because I'm assuming people will eventually figure it out and its going to stop working (or work in the wrong direction as too many people try to exploit the loophole), but who knows. The rules are here: https://en.wikipedia.org/wiki/Special_dividend this is a much better explanation than mine by a guy who is borderline retarded, but correct in this specific instance: https://www.reddit.com/r/wallstreetbets/comments/3vdbk7/enzn_dividend_play_everything_you_need_to_know/ greasyhands fucked around with this message at 00:08 on Jan 22, 2016 |
|
#
?
Jan 22, 2016 00:03
|
|
|
Blinky2099 posted:
well where else am I going to click my mouse and lose my house now
|
|
#
?
Jan 22, 2016 00:49
|
|
|
Dessert Rose posted:well where else am I going to click my mouse and lose my house now
|
|
#
?
Jan 22, 2016 00:58
|
|
|
Dessert Rose posted:well where else am I going to click my mouse and lose my house now This thread has created significantly less EV per capita than PITR, unfortunately. Good thing we can still talk about poker in between threads about dudes painting warhammer figurines.
|
|
#
?
Jan 22, 2016 01:39
|
|
|
Lol, I've gone first to last to first over 4 days in the Stockfuse game, all on the back of GLNG. I bought it because "high volatility" is what you want in a game like this normally.. but I wasn't expecting 40% 1D swings. ..and I just trimmed my GMLP real life position (which is not 1/3rd of my real portfolio, I'm not quite that crazy with real money) - I'm up about 30% there in a few weeks. I think both parts have taken a lot of undeserved "you're with oil" beating that they're now bouncing up from.. but they're back into something much more like a reasonable valuation now (I think), so I'm bailing. jmzero fucked around with this message at 16:40 on Jan 22, 2016 |
|
#
?
Jan 22, 2016 16:31
|
|
|
Quit going down like Tara Reid at a frat part AXP < >
|
|
#
?
Jan 22, 2016 19:27
|
|
|
I keep researching how to do options but I immediately forget because the terminology is weird.
|
|
#
?
Jan 22, 2016 23:47
|
|
|
Torpor posted:I keep researching how to do options but I immediately forget because the terminology is weird. This is me. I have to look up which one is a put and which one is a call, every goddamn time. It's like "wait, selling puts or buying, or did I want to sell a call, or... gently caress, look it up again". I love some of the terminology so much, though. "Iron Condor" is just cool as gently caress. Like if you're yakking about stocks with someone you can just casually drop that you "just made a bundle on an Iron Condor I opened up on T" and you sound like a total market badass (or maybe a cock, I dunno). e. Oh yeah, also: Leperflesh posted:For shits and giggles, I used a screener to find the companies with the highest dividend yield, no other criteria. The list is dominated by energy stocks, no surprise there, because I assume dividend yield just looks backwards at the most recent year of dividends and compares it to the current stock price. I should have bought TK on the dip (~ $4.60 on Jan. 20th). Closed at $6.33 today. Leperflesh fucked around with this message at 00:38 on Jan 23, 2016 |
|
#
?
Jan 23, 2016 00:32
|
|
|
Leperflesh posted:
You do know they cut that dividend by 90%... right? I've been following it also, interesting play but I'm not sure the oil carnage is over yet. Also, their debt to equity ratio is something like 9, which is a bit much for a company with a bunch of depreciating assets in a cratering industry. greasyhands fucked around with this message at 01:34 on Jan 23, 2016 |
|
#
?
Jan 23, 2016 01:31
|
|
|
Leperflesh posted:
I will never forget the day I discovered contango and backwardation were real words.
|
|
#
?
Jan 23, 2016 01:45
|
|
|
greasyhands posted:You do know they cut that dividend by 90%... right? I've been following it also, interesting play but I'm not sure the oil carnage is over yet. Also, their debt to equity ratio is something like 9, which is a bit much for a company with a bunch of depreciating assets in a cratering industry. I'm quite sure the oil carnage isn't over yet, yeah. I did not see the div cut. They're a company that holds two other companies, so I'm not sure if the debt to income ratio should be taken the same as you normally would. I admit I'm in the woods on this one, and only toying with the idea because I'm talking about a few hundred bucks; this is loving-around gambling money. As for cratering industry: my assumption is that TK's transport business is healthy, even if its offshore production business is cratering. One option would be to focus on the transport subsidiary, "Teekay Tankers, Ltd." (TNK) but either way, I'm thinking regardless of what oil and natural gas/LNG/LPG prices do, there's still going to be demand for transporting the stuff. And lately, just using tanker ships to store excess production. But the dividend cut calls that idea into question. I dunno. I'm looking at the big jumps in stock price the last two days and reacting to that, but long-term, this is a risky stock I don't know enough about, so I value your insights.
|
|
#
?
Jan 23, 2016 01:56
|
|
|
Leperflesh posted:This is me. I have to look up which one is a put and which one is a call, every goddamn time. It's like "wait, selling puts or buying, or did I want to sell a call, or... gently caress, look it up again". When I was a retard at Uni, I created a bunch of mnemonics and memory games to help me remember.  i.e. calls are right to buy, puts are right to sell And if you care about the pay-off diagrams, I somehow remembered that because the four of them made an easy-to-remember pattern and the word PICKLES was easy to remember (which lets you name your graphs with the P C L S for put, call, long, short respectively). Once you start trading them, it's pretty easy to remember the names I think, but I still find that diagram the quickest way to construct pay-offs. 
|
|
#
?
Jan 23, 2016 02:54
|
|
|
Mills posted:When I was a retard at Uni, I created a bunch of mnemonics and memory games to help me remember. that is one of the most ridiculous things I've ever seen to remember 2 words
|
|
#
?
Jan 23, 2016 03:37
|
|
|
greasyhands posted:that is one of the most ridiculous things I've ever seen to remember 2 words Most people I've taught it too have liked it and used it.
|
|
#
?
Jan 23, 2016 03:41
|
|
|
Cheesemaster200 posted:I have a long term focused portfolio consisting of individual stocks. I do this because I like managing my holdings and getting involved with the companies I own, rather than just handing over my money to a financial firm for an annual fee and forgetting about it. ETFs are helpful, and I have a lot of my money in them as well, but they are not the be all, end all when it comes to investing. Diversifying your own portfolio is quite a reasonable thing to do, however you just have to put the effort into it as you indicated. Don't buy XOM today and not look at it for 5-6 years, expecting it to have doubled. Same. I get weird pleasure from reading conference call transcripts, because I am a nerd. If you're really into it and don't mind turning button clicking and research into a hobby you can make it work. Sort of related; KMI has been having a heckuva rally. Strong management plus the financial blogosphere thinks it's ripe for a takeover. Would be down with industry consolidation I guess. PS business school teaches that dividends are priced into a stock, just to echo other posters.
|
|
#
?
Jan 23, 2016 04:54
|
|
|
If you need a mnemonic to remember the difference between puts and calls you probably shouldn't be trading options.
|
|
#
?
Jan 23, 2016 06:46
|
|
|
If anyone would like to short something I just took positions in $F and $GE, because thats how my life goes...
|
|
#
?
Jan 23, 2016 07:00
|
|
|
Xyven posted:If you need a mnemonic to remember the difference between puts and calls you probably shouldn't be trading options.
|
|
#
?
Jan 23, 2016 15:34
|
|
|
Einhorn getting a seat on the board at SUNE.
|
|
#
?
Jan 24, 2016 23:21
|
|
|
greasyhands posted:Einhorn getting a seat on the board at SUNE. Stock will probably get a bump but I don't see it as addressing the underlying problems (unless they figure step 1 is ousting current management).
|
|
#
?
Jan 25, 2016 00:53
|
|
|
Calls and Puts are the easiest parts, it's the Greeks that are the worst because they're not even that useful except for implied volatility. But I can see how entering an option order in especially Thinkorswim's platform might be pretty nuts the first few times around.
|
|
#
?
Jan 25, 2016 03:41
|
|
|
ayekappy posted:Calls and Puts are the easiest parts, it's the Greeks that are the worst because they're not even that useful except for implied volatility. But I can see how entering an option order in especially Thinkorswim's platform might be pretty nuts the first few times around. This right here is a bad post. If they're not useful, why would option traders talk about any greeks apart from vega?  It's because they're useful, but maybe not to your strategy
|
|
#
?
Jan 25, 2016 15:19
|
|
|
I sold MCD early last year at a localized high after dealing with two loving years of sales declines and lovely earnings. I sold because their earnings were starting to get squeezed at the time and I thought they would cut their dividend at some attempt of a reinvestment. The second after I sell they come out with an almost cost-less turnaround and jump thirty five loving percent over the last 12 months. I still think they are overvalued; MCD got a sales boost due to the issues in China resolving and the one-time addition of all-day breakfast. However I don't foresee them keeping it up long term. Regardless, it is annoying to look at. Ranks up there with my purchase of POT three days before the potash cartel broke up on the scale of unfortunate timing. At least I got myself out of that one in the long term.
|
|
#
?
Jan 25, 2016 17:08
|
|
|
Bought some TLN today for the IRA. Will sell it if it hits $12 in 2016, otherwise planning to hold for a long time.
|
|
#
?
Jan 25, 2016 20:47
|
|
|
Xyven posted:If you need a mnemonic to remember the difference between puts and calls you probably shouldn't be trading options. I don't trade options. But sometimes I talk about them online. greasyhands posted:that is one of the most ridiculous things I've ever seen to remember 2 words I have no trouble remembering the two words, but I do have trouble remembering which is which. Especially when I haven't discussed them or really thought about them for a couple of years since the last time I looked it up. I think it's because the words "call" and "put" have no colloquial meaning outside finance that even suggests their meaning within finance. It will probably help a lot if I go look up the etymology.
|
|
#
?
Jan 25, 2016 21:10
|
|
|
Look at them as the option writer. If you write a call contract, the option holder can call X shares from you. (buy X shares at the strike) If you write a put contract, the option holder can put X shares to you. (sell X shares at the strike)
|
|
#
?
Jan 25, 2016 22:03
|
|
|
|
| # ? Jun 8, 2024 02:09 |
|
|
That seems like a good way of thinking about it and I will try (and probably fail) to memorize that.
|
|
#
?
Jan 25, 2016 23:24
|
|