ChiefD
Footballguy
Ok, for a noob like myself can you explain this in easy to understand terms?
Thanks in advance.
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Stock Thread (11 Viewers)
- Thread starter St. Louis Bob
- Start date
Thanks in advance.
Ignoratio Elenchi
Footballguy
Shorting a stock is effectively the opposite of buying a stock. When you buy a stock, you're betting that its value will go up. You make money when it goes up and lose money when it goes down. When you short a stock, you're betting that its value will go down. You make money when it goes down and lose money when it goes up. When you buy a stock, there's limited downside (you can only lose whatever you spend on the stock) and unlimited upside (the price can just keep going up forever). When you short a stock, there's limited upside (it can only go down to $0) and unlimited downside (the price can just keep going up forever). Shorting a stock is not really ever "easy money," but it is one way you can profit off a stock if you think it's currently overvalued and due to go down.
-OZ-
Footballguy
I'll agree, I was surprised when I looked yesterday at just how fast it has soared.
Yep
I'll agree, but will continue to hold 8% of my Roth IRA. (Which isn't much really)
If I had bought in when I should have, I wouldn’t be selling. I just can’t give myself a good reason to buy in right now.
Don Hutson
Footballguy
Why not sell and see what happens? Buy back in a week or two. It's chances of going down in the short term are probably 10 times as high as its chances of going up in the short term.
Don Hutson
Footballguy
Anytime I'm thinking of selling, I ask myself if I would buy it right now. If I'm not willing to buy it right now, then I sell it. Obviously, long term capital gains tax implications can alter this way of thinking.
-OZ-
Footballguy
Just a philosophy thing. I don't sell off the assets in the IRAs. I could reallocate to a lower percentage, but the plan for the IRA is to buy and hold, with the occasional rebalance.
ETA - 13 holdings (2 of which are sector ETFs), everything within 5-10% of the account total. That's the road map, I'll follow it.
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General Malaise
Footballguy
Good post. Having traded for a dedicated short seller for 8 years it's an incredibly stressful strategy and only "easy" when it works. You're generally a contrarian battling larger masses of bullish investors who include the management teams and employees of the company themselves and they are desperate to keep their share prices rising.
Also, shorting stocks can be expensive - done correctly, you must first secure a borrow. If you get one, you must pay a "vig" to keep that short position on. Some shorts have steep rates to maintain so your conviction needs to be strong. You can go belly up fast being a short seller. It's incredibly hard to do over a sustained period of time, like say the last 11 years or so. Many of the dedicated short managers I worked with gave up the ghost and are doing other things for a living.
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Yeah, I’m not a short term player. Maybe I’ll hold on too long but I’ve got a bunch of stocks that ran up and paused and then rallied. Missing those big days like LVGO today take a huge bite out of overall returns. I tend to buy stocks that I want to ride for several years and hopefully can be multi-baggers and those are the stocks the service I subscribe too recommends.
Just this year alone, almost every stock I own has had a 10%+ day and a few had 25-40%+ days. I have no clue when those will happen so I buy and ride. I’m a relative newbie at individual stock investing so we’ll see how it goes the next few years.
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⚡DEADHEAD⚡
Footballguy
Novavax. Somebody is making a lot of money there.
⚡DEADHEAD⚡
Footballguy
Serious question about Novavax. $1.6 billion government deal, $6 billion market cap. Seems there's space for this to move higher, right? Cap shy of 4x revenue (not sure if the $1.6b is one year).
One-time deal, so I guess it might disappear next year, which puts the company back where it was. Guess I'm answering my own question.
One-time deal, so I guess it might disappear next year, which puts the company back where it was. Guess I'm answering my own question.
adonis
Footballguy
Options question: If I thought AAPL would decrease in price in the second half of this year significantly, say 20% or more, I could buy a call for say $340 that expires in November, right? So if the list price is $50.62 for a strike price of $340 for nov 20th, 2020, would I have to pay $50.62*100=$5,062 to have the opportunity between now and November 20th to buy apple shares at $340?
What's the limit of the number of shares I can buy at that price? I assume it's 100 in my example? Do i have to buy all $100, or can I just buy 10 or so...?
What's the limit of the number of shares I can buy at that price? I assume it's 100 in my example? Do i have to buy all $100, or can I just buy 10 or so...?
Ignoratio Elenchi
Footballguy
If you think AAPL is going to decrease to $300 this year, why would you want to pay for the right to buy it at $340?
beef
Footballguy
I'm not sure I understand this one. Is their deal to mass produce a vaccine, even though they don't have a vaccine? Fed going to take control of the drug that works and give it to Novavax to make, or is the deal only if their vaccine works? I missed what they were saying on Bloomberg when they were talking about Novavax.
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adonis
Footballguy
Good point
. Getting crossed up on the terminology. Just trying to talk through how to assess a trade with all the info.How about:
Options question: If I thought AAPL would decrease in price in the second half of this year significantly, say 20% or more, I could buy a put for say $340 that expires in November, right? So if the list price is $15.75 for a strike price of $340 for nov 20th, 2020, would I have to pay $15.75*100=$1,575 to have the opportunity between now and November 20th to sell apple shares at $340?
What's the limit of the number of shares I can sell at that price? I assume it's 100 in my example? Do i have to sell all 100, or can I just sell 10 or so...?
And for the sale, would I have to have the shares to sell in my account?
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CR69
Footballguy
If you think Apple is going to drop you would buy puts or sell calls. Buying options has a capped downside since you can only lose the money you paid for the option but with selling options you have unlimited risk unless they're covered calls with shares you own. Stick to buying at first. I'd recommend opening a paper account on Thinkorswim (TD Ameritrade) to play around with the mechanics of trading options.
I tend to stick to options with 30-90 day expiration dates.
ConstruxBoy
Kate's Daddy
Maybe I'm missing his point, but if he thinks it will drop to $340 AND he wants to buy some at $340, shouldn't he sell puts at $340? Make some money while waiting for it to fall to $340.
Jayrok
Footballguy
Ignoratio Elenchi
Footballguy
Yes it's standard for an options contract to be for 100 shares. Someone more experienced will correct me if I'm wrong, but I don't believe you can partially exercise a contract, it's 0 or all 100. (If you bought two options, you could exercise 1 and not the other, but you can't break up a single option by only exercising 10 of the 100 shares or whatever).Good point
How about:
Options question: If I thought AAPL would decrease in price in the second half of this year significantly, say 20% or more, I could buy a put for say $340 that expires in November, right? So if the list price is $15.75 for a strike price of $340 for nov 20th, 2020, would I have to pay $15.75*100=$1,575 to have the opportunity between now and November 20th to sell apple shares at $340?
What's the limit of the number of shares I can sell at that price? I assume it's 100 in my example? Do i have to sell all 100, or can I just sell 10 or so...?
And for the sale, would I have to have the shares to sell in my account?
You don't need to have the shares to sell in your account when you buy a put. When you decide to exercise the option (e.g. if you bought a put with strike price of $340 and now the price of AAPL has dropped to $300), you'd effectively just buy the shares at that point for $300 and immediately sell for $340, pocketing the difference.
ConstruxBoy
Kate's Daddy
What he should do is put $34,000 in his account, sell 1 APPL put at $340 for the next month and wait. Do this each month until it drops, using the proceeds from selling the monthly puts to replace the initial $34,000 in the account.
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FreeBaGeL
Footballguy
Well @adonis said buy a call at $340. Buying calls is a bullish move. If he thinks it will drop it doesn't make sense to buy $340 calls because if it drops those $340 calls will be cheaper, so he loses money on a drop.
Like you said I think selling puts is what he is looking for here, but even that is a bullish move in reality. If he very is confident it will drop then the best move is just to wait to buy the dip or buy puts. Selling puts is more along the lines of something you don't necessarily think will drop, but wouldn't mind owning if it did. If he is generally bullish on the stock long-term and wouldn't mind buying it at $340 even if it drops to $300 then selling puts make sense, as he makes some premium if he's wrong and it doesn't drop or it doesn't drop far below $340.
ConstruxBoy
Kate's Daddy
Good point. Your bold is a better way to put it. That's what I was thinking he meant.
CR69
Footballguy
Oh I didn't get that from his post when I first read it but it does look like you're right.
The main thing though is he'll need $34,000 in that scenario to complete the trade if it gets assigned.
ConstruxBoy
Kate's Daddy
Jayrok
Footballguy
Brazil President tests positive for Covid
In the Dr. Been interview, NP was asked if other countries have reached out and he mentioned UK and Mexico potential trials (although, oddly, trials have not begun in Mexico yet) but no other countries have. He did say that Cytodyn was ready and willing to work with other countries, in quick time.
Dr. Been said that he has colleagues from various countries that he would reach out to as a potential ice breaker for other country contacts.
Mexico trials have not started but everything Mexico has asked for, Cytodyn has had a quick response, per NP.
Perhaps Dr. Been knows someone in Brazil as they've really been hit hard with this virus.
In the Dr. Been interview, NP was asked if other countries have reached out and he mentioned UK and Mexico potential trials (although, oddly, trials have not begun in Mexico yet) but no other countries have. He did say that Cytodyn was ready and willing to work with other countries, in quick time.
Dr. Been said that he has colleagues from various countries that he would reach out to as a potential ice breaker for other country contacts.
Mexico trials have not started but everything Mexico has asked for, Cytodyn has had a quick response, per NP.
Perhaps Dr. Been knows someone in Brazil as they've really been hit hard with this virus.
BassNBrew
Footballguy
i ended up buying back all the shares I sold and then some in the last hour or two in the $77-$79 range on the pullback so I'm enjoying the ride today.
Bob Sacamano
Footballguy
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Bob Sacamano
Footballguy
Bob Sacamano
Footballguy
fwiw: I own no shares of TSLA, and I never have. I shorted them briefly before deciding it was a fool's errand and taking the little profit I had in it.
None of that means they can't accomplish more than just being a car with some fancy gadgets.
Of course, I also suspect people who say it's just a car with some fancy gadgets have never driven one.
None of that means they can't accomplish more than just being a car with some fancy gadgets.
Of course, I also suspect people who say it's just a car with some fancy gadgets have never driven one.
dkp993
Footballguy
Yeah I don’t understand that line of thinking, Tesla has single-handedly revolutionized the car industry. While it may not be as revolutionary as Amazon, not sure what has been, but Tesla has completely changed the car game.
djmich
Footballguy
At this point for me I just want these guys to finish the swing on US and Mexico. They don't have the personnel capacity to be globtrotters yet.
Bob Sacamano
Footballguy
Bob Sacamano
Footballguy
Thanks for the heads up. Took the money I was contemplating between it and NEE and wrote PPL Oct $23s
Buttonhook
Footballguy
My guns go Boom Boom and your guns go pow pow
Sorry, but this made me think of a Gang Starr lyric...
CR69
Footballguy
General Malaise
Footballguy
My boss has had one now for a few years and loves it. Anything happens to it, a technician drives over to our office, diagnoses and fixes on the spot. Only fluid in his car is the windshield wiper fluid so the odds of some sort of breakdown are slim.
While we're on that subject, the American made minivan that my wife insisted we buy 5 years ago is stuck in Seaside, Oregon at an auto mechanics named Doc who probably isn't a doctor at all. It's been there since Friday. Last check, it is Tuesday. He THINKS it might be a transmission solenoid but will have to call me back. I don't have a warm fuzzy feeling about this. Just a reminder that I live about 80 miles away from Seaside, Oregon and that's really our only family vehicle. This is cool. This is fine.
I was considering an EV for our next purchase but this little encounter has all but sealed it for me.
General Malaise
Footballguy
I drove his Tesla once and boy howdy, is it fast. Even without the vroom vroom, it's an astonishingly fast ride when you punch the gas accelerator. When you let your foot off, however, it's an odd sensation not to coast. It's like applying the brakes.
Don Hutson
Footballguy
I'm thinking of getting a Tesla with my Lebron Limade profits. I like hippie chicks. I figure having an electric car might help me get laid.
BassNBrew
Footballguy
Bob Sacamano
Footballguy
I've had one for a little over a year and a half. There are things they can not fix without taking it to a shop, but yes, the mobile repair option is handy. There are also other things that need repaired, and I'm fortunate mine has been under warranty, as I've been in a few times with issues.
That said, it's still the best car I've ever owned by a significant margin. It's so much fun to drive it's ridiculous. A speeding ticket is an inevitability, though none so far. And I don't know that I could ever go back to my primary mode of transportation being an ICE car.
Chaz McNulty
Footballguy
Why would any other country waste time running a trial for this. If it shows success do you think there's a chance the US lets a vial leave the country?
Al Czervik
Not wearing pants
EVs are like that. Instant response and quick acceleration (similar to how a drill reacts when you press the button).
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fantasycurse42
Footballguy Jr.
If I own an electric car, it will be a Taycan. I really want to get in the saddle of that and test it out, but we're not due for a new vehicle until 2022. I need a gigantic SUV anyways.
