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Stock options

BonerBoy

BonerBoy

New member
I have close to $15,000 that I plan to buy stock options (Leaps), here's what I've been been looking at

BAC JAN 2009 50.000 CALL @6.40 TARGET 60 (bank of america)

PEP JAN 2009 60.000 CALL @10.00 TARGET 72 (pepsi)

MSFT JAN 2009 25.000 CALL @4.70 TARGET 31 (microsoft)

IBM JAN 2009 80.000 CALL @12.00 TARGET 93 (IBM)

PNRA JAN 2009 50.000 CALL @12.OO TARGET 67 (panera bread)

I only have the 15 G's and I'll probaly spread it around on 3 of these leaps,

Are there any traders here that can give a first time options buyer some input?
 
BonerBoy said:
I have close to $15,000 that I plan to buy stock options (Leaps), here's what I've been been looking at

BAC JAN 2009 50.000 CALL @6.40 TARGET 60 (bank of america)

PEP JAN 2009 60.000 CALL @10.00 TARGET 72 (pepsi)

MSFT JAN 2009 25.000 CALL @4.70 TARGET 31 (microsoft)

IBM JAN 2009 80.000 CALL @12.00 TARGET 93 (IBM)

PNRA JAN 2009 50.000 CALL @12.OO TARGET 67 (panera bread)

I only have the 15 G's and I'll probaly spread it around on 3 of these leaps,

Are there any traders here that can give a first time options buyer some input?
Click to expand...
The bid/offer spreads are too big for retail investors to succeed trading options. Also, you're probably buying options to get a leveraged position, not to trade the implied volatility of the shares, which means you're also taking positions in second-order risks you really don't want. Point being, you shouldn't trade stock options at all.

If you want leveraged positions, get yourself a futures account and trade that way. There are single-stock futures on most of the issues you named. That way you don't bleed time value and you get much tighter markets.
 
No, I trade options and those are not good picks and your over paying as far as I'm concerned. Your in the money at least but the time premium is going to get you. MS and IBM are not going where you think they're going. Your B of A is probably your best pick.

I would much rather buy something like PALM 15 leaps @ 1.70. For that matter I bought KRY 2.50 calls@ .75. Jan. 07's, that's risky but it can't go down much, not much of a premium and the pay off can be huge.

I wouldn't do what your doing. Use options to hedge or to full on speculate. Not something in between.
 
kiss your 15 grand goodbye whiteboy if you stick it options. buy the underlying stock if you think it's going to where you want. if it doesn't by the timeframe you thought it did, at least you will still have the majority of your investment (if not more if the price went up). with options if the price goes below your call price, your options are COMPLETELY worthless
 
Boner i just looked your post over again and i didn't realize your going for 2009 leaps. What are you trying to do? I thought you were going after 07 that's why i thought the prices were way to high but that is still not the way to use options. Leaps that far out have to do with large(million share) long term investments or large long term short hedges and there are some possible other uses. Those aren't speculation. Let's take IBM, if it goes up to 93 that doesn't mean your call options are going to go to 25. I don't know if you intend to keep the options till 2009 or what the hell your trying to do.

What exactly are you trying to do?
 
Creepusmaximus said:
My KRY options just started hitting. $1.20 today. Over a 50% gain in under 3 weeks. That's how to speculate.
Click to expand...

How did you find KRY anyway? I've never heard of that company. Is this just a random speculation or did you do some stock screens?
 
charx22 said:
How did you find KRY anyway? I've never heard of that company. Is this just a random speculation or did you do some stock screens?
Click to expand...

Up to $1.50 on the Jan. calls.
It was a crammer pick about 3 or 4 months ago. He finds some good stocks but it's usually a good idea to wait a while and do your DD before you buy. He had the CEO on mad money and basicly I put it on my watch list and when it dropped under $3 I started watching it hard trying to find a bottom. I find stock picks all over the place, you never know what useful info will pop up then you need to really research it. Don't just take some guys stock pick and buy it. No one is 100% right, for that matter it's very hard to be 75% right.
 
Creepusmaximus said:
Up to $1.50 on the Jan. calls.
It was a crammer pick about 3 or 4 months ago. He finds some good stocks but it's usually a good idea to wait a while and do your DD before you buy. He had the CEO on mad money and basicly I put it on my watch list and when it dropped under $3 I started watching it hard trying to find a bottom. I find stock picks all over the place, you never know what useful info will pop up then you need to really research it. Don't just take some guys stock pick and buy it. No one is 100% right, for that matter it's very hard to be 75% right.
Click to expand...


ahhh Cramer. I wonder how many people were screwed over the ZZ tip.
 
best investment advice I ever got...











learn with other people's money :D
 
ZZ screwed a few people I bet. BTW Crammer sucks at retail. I stay away from retail because it's a guessing game unless you have a way to see inside sales figures.

Learning with other peoples money is always a good way to start. Every time i learned a new way to trade i LOST MONEY AT IT until I figured it out. I short a lot of stocks now and do well at it but I've made some stupid mistakes in the past. Options are really easy to lose money at. Writing options isn't an easy thing either.

Good luck.
 
Creepusmaximus said:
ZZ screwed a few people I bet. BTW Crammer sucks at retail. I stay away from retail because it's a guessing game unless you have a way to see inside sales figures.

Learning with other peoples money is always a good way to start. Every time i learned a new way to trade i LOST MONEY AT IT until I figured it out. I short a lot of stocks now and do well at it but I've made some stupid mistakes in the past. Options are really easy to lose money at. Writing options isn't an easy thing either.

Good luck.
Click to expand...

Options are almost like going to Vegas. You can lose it all if it goes the other way.
 
Straight from the option floor

First do you want to own any of these stocks long term?

If you do then I have a much better strategy for you.

Take your first option

BAC JAN 2009 50.000 CALL @6.40 TARGET 60
if the stock does go to 60 you make 3.60 less commissions
but if it stays below 56.40 you lose money

But let say you SELL the same PUT for 6.00

Then if the stock goes to 60 you make 6.00

you dont really "lose money" until the stock goes below 44.00.

If the stock is 58 at expiration. You end up buying the stock for 50-6 = 44 and it is trading for 58. You can turn around and sell the stock at the market or buy back the put to close your account.

You get hurt if the stock goes way down( same risk as owning the stock). If the stock goes to ZERO or way below 50. You lose for example at a stock price of 30, 50-6 = 44. So here you own the stock at 44 and it is trading at 30(OUCH)

Now if your real lucky and you collect the 6.00 you can turn around and buy a call for free or buy the stock at a 6.00 discount, which is like 10% discount from 60.

This is a little advanced and alot of people say selling put options is unlimited risk. But but buying stock also has the same risk on the downside.

Of course I cant offer financial advice since I am not licensed.

And as always consult your financial adivisor before any significant investment
 
You know what I would do. If your going to hold for 2 or three years I would buy home builders. Their cheap right now and the baby boomers are retiring. Housing market will be strong after this little correction is over. I like toll brothers BTW.
 
Creepusmaximus said:
Up to $1.50 on the Jan. calls.
It was a crammer pick about 3 or 4 months ago. He finds some good stocks but it's usually a good idea to wait a while and do your DD before you buy. He had the CEO on mad money and basicly I put it on my watch list and when it dropped under $3 I started watching it hard trying to find a bottom. I find stock picks all over the place, you never know what useful info will pop up then you need to really research it. Don't just take some guys stock pick and buy it. No one is 100% right, for that matter it's very hard to be 75% right.
Click to expand...

As the old saying goes, anyone who is right even 51% of the time can go to Wall Street and make $1 million a year tomorrow.
 
zaxxon1982 said:
The bid/offer spreads are too big for retail investors to succeed trading options. Also, you're probably buying options to get a leveraged position, not to trade the implied volatility of the shares, which means you're also taking positions in second-order risks you really don't want. Point being, you shouldn't trade stock options at all.

If you want leveraged positions, get yourself a futures account and trade that way. There are single-stock futures on most of the issues you named. That way you don't bleed time value and you get much tighter markets.
Click to expand...

I don't plan to trade them, I plan to buy and hold them

I'll look into the stock futures, thanks `
 
Creepusmaximus said:
No, I trade options and those are not good picks and your over paying as far as I'm concerned. Your in the money at least but the time premium is going to get you. MS and IBM are not going where you think they're going. Your B of A is probably your best pick.

I would much rather buy something like PALM 15 leaps @ 1.70. For that matter I bought KRY 2.50 calls@ .75. Jan. 07's, that's risky but it can't go down much, not much of a premium and the pay off can be huge.

I wouldn't do what your doing. Use options to hedge or to full on speculate. Not something in between.
Click to expand...

Not good picks?

BAC JAN 2009 50.000 CALL @7.00 up .60 X 10c's = $600

PEP JAN 2009 60.000 CALL @12.50 up 2.5 X 5c's = $1250

MSFT JAN 2009 25.000 CALL @5.14 up .44 X 10 = $220

IBM JAN 2009 80.000 CALL @12.70. up .70 X 5c's = $350

PNRA JAN 2009 50.000 CALL @17.20 up 5.20 X 5c's = $2600

I"ll let my picks speak for themselves, though I havent bought yet

Creepusmaximus said:
MS and IBM are not going where you think they're going. Your B of A is probably your best pick.
.
Click to expand...

Actualy thats what the S&P analysts have they're 12 mo target at. all of them are rated strong buys, so why not take advantage of the leverage an option (leap) provides?






.
 
Devastation said:
kiss your 15 grand goodbye whiteboy if you stick it options. buy the underlying stock if you think it's going to where you want. if it doesn't by the timeframe you thought it did, at least you will still have the majority of your investment (if not more if the price went up). with options if the price goes below your call price, your options are COMPLETELY worthless
Click to expand...

Thanks for the input bro, sorry it took so long to get back, ive been realy busy, heres my reasoning for buying options rather than the underlying stock. It's the levarage

Last mo. (8-26) I could have bought 10 contracts of
BAC JAN 2009 50.000 CALL @6.40 TARGET 60 (bank of america)

For $6400, I could have the option to buy 1000 shares for $50 for the next 2yrs & 4mo's
Or at $51.50 I could own 124 shares of the stock

Today one month later (9-26) the option sold for 7.10 and the stock sold for 53.48

The profit on the options $700
The stock only $248

Look at this one
PNRA JAN 2009 50.000 CALL @12.OO TARGET 67 (panera bread)

last mo. (8-26) For $12,000 I could have bought options to buy panera for $50 for the next 2 yrs. 4 mos.
on (8-26) stock sold for about $52 so, for $12,000 I could own 230 shares

Today (9-26) the option sold for 17.2 and the stock sold for 60.11

The profit on the options would be $5,200
The profit on the stock only $1,825

The profits are unlimited and the only risk is, the cost of the option

I picked, Bank of America, Pepsi and Microsoft because S & P has them rated as a "STRONG BUY"

IBM because it is considered by most analysts as undervalued by up to 25% and is rated a "BUY"

Panera I like because of its strong growth forcast, its rated a "BUY" by S & P anylists
 
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