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A call is bullish on a stock. A put is bearish on a stock. If you're selling an option to open, you're betting against what it is. If you're buying an option to open, you're betting on what it is. Buying to open has 0 liability, you can only go to 0 if you're wrong. Selling to open gives you premium(cash), but infinite liability.
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Jan 26, 2016 02:49
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| # ? Jun 8, 2024 11:19 |
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Depends if you are buying or selling the option too. You can own stock and write options as a limited bullish way to collect premium.
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Jan 26, 2016 02:52
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We are going to rally hard tomorrow BTW, hope no one did too many bearish bets. 
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Jan 26, 2016 02:55
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Rally hard the day before a fed meeting that is already jawboning disappointment?
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Jan 26, 2016 03:49
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ayekappy posted:Buying to open has 0 liability, you can only go to 0 if you're wrong, or if you were right, but didn't have good enough timing. Fixed that for you.
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Jan 26, 2016 04:17
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I just remember you can "call" up someone, and you can "put" down someone. I'm too dumb to know how to trade options though so I guess it's useless for me anyway.
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Jan 26, 2016 10:52
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flowinprose posted:Fixed that for you. It's always about time and price in options so it was implied.
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Jan 26, 2016 14:35
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Speaking of puts, I just sold puts at $90 and $100 for AAPL and used some of the proceeds to buy puts on NFLX at $80. All Feb expirations. My rationale is that I'm long AAPL and happy to buy at either of those prices. I got $5 a share for the $100 strike, so my effective price if it's called is $95. I'd be very happy to get AAPL at that price. $90 I don't expect to get called, so I'm hoping to keep that $1.5 per share, but if it does I get AAPL at $88.50 a share. Selling puts is fun. NFLX is straight up gambling while I figure out how I'd like to actually short. I've decided NFLX is the first stock I'm going to short. I don't know what I want to do yet, but I don't want to have no exposure going into earnings. It's a small bet. I think the fundamentals speak for themselves with NFLX. It's a good service, but not at this valuation. Their moat isn't that impressive. They were first into the streaming space, but first in is almost never a winner in technology. I may short HCG at some point too, as a proxy for the Canadian real estate bubble. From my digging it's the best bet for that particular short. It's not as simple as the American market was because the CMHC (Candian Mortgage and Housing Corporation) isn't publicly traded, and Canadian banks aren't as deeply entrenched as US banks were. HCG is already down pretty big from its peak, but Canada is still in the throes of an insane market. The country is collectively losing its minds. Oil money is evaporating and the Chinese market tanking will hurt them too. Canadian real estate is largely propped up by Chinese investors. It's going to fail spectacularly, the only question is how badly that will hurt whatever stock you choose to use to short the market.
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Jan 26, 2016 16:11
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Good luck on that AAPL trade. I don't really want to play earnings but generally speaking I'd be happy to buy down here as well, so possibly generating some income by put writing seems reasonable.
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Jan 26, 2016 16:59
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I figure Apple is headed towards a 10% swing up or down depending on earnings. We'll see if those supply chain checks were worth anything at all
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Jan 26, 2016 17:33
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The 6s was trash. Aside from markets or anything else, let me vent about still using my 5s when I really wanted to upgrade but saw that piece of poo poo and said nope. It's missing basic hardware improvements and priced at a huge premium. Maybe that's good news for Apple if they got a huge base to buy into their overpriced phone, but personally I'm disappointed.
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Jan 26, 2016 17:39
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DNK posted:The 6s was trash. Aside from markets or anything else, let me vent about still using my 5s when I really wanted to upgrade but saw that piece of poo poo and said nope. It's missing basic hardware improvements and priced at a huge premium.
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Jan 26, 2016 17:55
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cowofwar posted:Users have never given a poo poo about Apple hardware specs. As long as it's an incremental improvement and looks nice has best of class UI then users buy. That's exactly what I'm saying, though: I enjoy my 5s for its appearance, UI, and performance. The 6s was negligible improvement on all of those fronts. What the heck, Apple. That's 2 product cycles that I ignored because you can't make a product worth buying.
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Jan 26, 2016 18:00
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The 6 (non-s) was a huge success though and a substantial change in hardware.
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Jan 26, 2016 18:04
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I don't know how you can say the 6s was a lackluster performance improvement over the 5s when it had something like a 30-40% processor speed bump over the 6, but okay, sure
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Jan 26, 2016 19:31
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ayekappy posted:It's always about time and price in options so it was implied. A lot of things about options are implied (haha....) but since we were discussing this with people who are having difficulty even remembering the definition of calls and puts, I think it is probably important to be a little more detailed in explanations/examples.
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Jan 26, 2016 21:32
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ayekappy posted:We are going to rally hard tomorrow BTW, hope no one did too many bearish bets. Nice call today but what were you going off of? Do we slam hard now that crude build was bad, apple was bad, or do we just do nothing since fed meeting coming?
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Jan 27, 2016 00:09
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Christobevii3 posted:Nice call today but what were you going off of? Do we slam hard now that crude build was bad, apple was bad, or do we just do nothing since fed meeting coming? Mainly the McClellan Oscillator's MACD crossover. I'm going to go out on a limb and say up tomorrow and possibly into the weekend. SPX still trending, so this after hours stuff is noise. Still higher lows on CL for now, although lower high, but might just be flagging from that initial reversal move. Precious metals being part of this rally was really encouraging.
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Jan 27, 2016 00:40
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ayekappy posted:Mainly the McClellan Oscillator's MACD crossover. Are you being satirical or is this actually a thing?
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Jan 27, 2016 06:24
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Cheesemaster200 posted:Are you being satirical or is this actually a thing? Nah, it's real. quote:We use two different EMAs: one with a 10% smoothing constant, and one with a 5% smoothing constant. These are known as the 10% Trend and 5% Trend for brevity according to the tradition established by the late P.N. Haurlan who first used EMAs for tracking the stock market in the 1960s. The numerical difference between these two EMAs is the value of the McClellan Oscillator. Here you can see when the histogram goes positive in a meaningful way, there is also a crossover, generally it means there is some good momentum(from the MACD) of positive money flow(from the NYMO) going into the move. The McLellan Sentiment Index is nice for breadth analysis. ayekappy fucked around with this message at 06:41 on Jan 27, 2016 |
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Jan 27, 2016 06:38
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Speaking about breadth, keep your eye on the Zweig Breadth Thrust indicator, if we hit .615 in another 5 days or so, all that bear market talk was probably bullshit. http://stockcharts.com/public/1130414/chartbook/230315073
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Jan 27, 2016 06:54
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Jan 27, 2016 08:40
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Goons really are the best trolls in the world
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Jan 27, 2016 08:41
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You have to love chart analysis. It combines all the best elements of numerology, astrology and regression analysis and muddles them all up in quasi-scientific/mathematic terms to make them sound legit.
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Jan 27, 2016 14:40
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If it only it weren't for the spread, even an imperfect indicator would be better than no indicator at all.
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Jan 27, 2016 15:26
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Thar' she blows.
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Jan 27, 2016 17:28
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Part of me feels good about lightening my AAPL exposure over the last couple months. The other part is sad I still have exposure.
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Jan 27, 2016 17:36
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SUNE gimmick account victory Good thing I actually bought ten dollars worth the same day.
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Jan 27, 2016 17:43
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Josh Lyman posted:Part of me feels good about lightening my AAPL exposure over the last couple months. At least you don't own BA (like me).
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Jan 27, 2016 17:49
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aqu posted:SUNE gimmick account victory Is it too late to join this and if no, can I get a link? Tried to find it in the last few pages but no luck.
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Jan 27, 2016 18:08
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Moridin920 posted:Is it too late to join this and if no, can I get a link? Tried to find it in the last few pages but no luck. Download the stocksense app then join the SA group. Don't know of there is a time window or not.
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Jan 27, 2016 18:35
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Josh Lyman posted:Part of me feels good about lightening my AAPL exposure over the last couple months. I feel your pain. But it still seems to me like this is the old case of the market remaining irrational longer than us remaining solvent. If we assume zero profit growth, AAPL is a screaming buy. Slightly negative growth, and it's still a good buy. The only way the share price pencils out to me is if there is an immediate, gigantic collapse in profits--and that seems unlikely. Though that said the next potential catalyst is the update to the dividend and share buyback program in April. What I'd like to see is a large boost to the buyback over higher dividends.
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Jan 27, 2016 18:40
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Agronox posted:I feel your pain. But it still seems to me like this is the old case of the market remaining irrational longer than us remaining solvent. The fear isn't their profit or revenue now, but their lack of growth for the future. The iPhone is most of Apple's ~550bn valuation. If sales of that flat line, what is justifying an increased valuation of the company? The problem isn't that Apple doesn't make oodles of money, the problem is that they aren't increasing that amount to justify it being the most valuable company on the planet. That is why Apple has been faltering lately. Saying that the market is irrational about Apple is making the statement that you feel revenue and profit growth will continue on the ~30% level that has characterized the last 4-5 years. That is a bold statement.
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Jan 27, 2016 18:48
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Apple is valued at 10x trailing earnings. That is absurbly cheap for earnings and if I had the liquidity, I would buy a bunch. In context, Microsoft is trading at 35x trailing earnings, 16x forward. Is a dollar of Microsoft earnings that much safer than a dollar of Apple earnings that you would pay more than 50% more for it?
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Jan 27, 2016 19:18
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Cheesemaster200 posted:The fear isn't their profit or revenue now, but their lack of growth for the future. The iPhone is most of Apple's ~550bn valuation. If sales of that flat line, what is justifying an increased valuation of the company? The job of a public company isn't to increase sales. It's to increase profits. If profits remain constant down here, AAPL is both relatively and absolutely undervalued. quote:That is why Apple has been faltering lately. Saying that the market is irrational about Apple is making the statement that you feel revenue and profit growth will continue on the ~30% level that has characterized the last 4-5 years. That is a bold statement. Not at all, and I suspect if you read what I wrote above you didn't understand it.
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Jan 27, 2016 19:24
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quote:In context, Microsoft is trading at 35x trailing earnings, 16x forward. Is a dollar of Microsoft earnings that much safer than a dollar of Apple earnings that you would pay more than 50% more for it? There's a limit to how far you can take this - I mean, Amazon is at like 800 PE. How safe must their earnings be? The presumption is that these numbers have huge capacity to change, and I think it's fair to say that Apple's situation has real potential to change quickly for the negative and less room to have a huge shift positive - so a straight ratio isn't telling us that much necessarily. Apple is obviously a deal right now, but they're reliant on a pretty small set of products for the bulk of their profit - and even those few products all have big network effects between them. Their competitors are snapping at them all the time; if there was a generation of Android phones with some new killer feature, their phone market share could evaporate very quickly, and their PE could change very fast. Microsoft's valuation seems high to me, but they also have a much more diverse set of revenue streams, less obvious potential to get slammed by a single huge failure or competitor (they have a "regular" failure often and it doesn't much matter), and probably more potential for upside (I mean, what if they made a phone somebody wanted?). I'm not betting against Apple, but in many ways they're as much like GPRO (PE of 9!) as they are like MS.
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Jan 27, 2016 20:15
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The history of computing hardware is every established player getting wiped out en masse every 10 or 15 years because they missed the shift to the next class of smaller, more capable device. As went Sperry and Cray and Data General and SGI so now are bleeding HP and Dell. The question is whether anything will displace the smartphone/tablet form factor and if so, what and who?
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Jan 27, 2016 20:33
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Agronox posted:The job of a public company isn't to increase sales. It's to increase profits. I agree, and I argued this a few pages back with Amazon, but the fact of the matter is that many investors don't agree with this statement, especially today. As was previously said, AMZN has a PE of 800+, but they grow their revenue at a fantastic pace. Therefore they keep rising, regardless of their lack of profitability. If you watch earning reports for lots of the Dow components, you will see that there is a lot of EPS growth, but little revenue growth. Most companies who beat on EPS but don't beat on revenue get slammed. The market wants revenue growth right now, not EPS, because revenue growth indicates a "winner" in what many are assuming is an upcoming (or even current) bear market.
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Jan 27, 2016 21:30
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The job of a public corporation is to return value to its investors. A company can return value by growing, making profits, or both. Sometimes a company grows at the expense of profits or profits at the expense of growth. It's up to the investors to decide if they like how the company's directors is going about returning value to them. Amazon's valuation indicates that its owners are happy with the way that Amazon returns value to them - through growth, rather than profit. Apple's valuation suggests its investors are not happy with how Apple is returning value to them - but it's difficult to coherently explain why. Apple's growth has been amazing, and it's made generous profits. It's P/E suggests Apple's investors are worried that either or both are going to fall precipitously. I'd actually hazard a guess that a third factor is playing in: Apple's sheer size. Would-be investors look at Apple's total valuation and think "how can a company that makes gadgets be so big? Surely it has to fall, it can't be a bigger than Exxon and every other American company, that just doesn't make sense." E.g., Apples valuation is based on irrational feels, rather than rational evaluation of its position and prospects. Which goes right back to Agronox posted:the old case of the market remaining irrational longer than us remaining solvent Apple should be a screaming value right now, but maybe it isn't, simply and entirely because investors are afraid of how big the company is.
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Jan 27, 2016 21:46
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It's all made up folks. Welcome to a monetary belief structure.
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Jan 27, 2016 21:52
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