Orlando Ayala Cant Read said:

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WGann3 said:

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Anyone here taking a longer position on NET (Cloudflare)? I've seen it come up here and there in the faster paced thread. Don't think it's been discussed at all here. It's got my attention, but it's a reddit darling which typically means it's a new Robinhood investor go to... which isn't necessarily a bad thing. But always gives me a little pause.

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I'm in it for the long haul. My current long hauls are:

APPL (I have posted several times and I could be wrong as I'm still very new to this, I think this is going to really blow up again post split)
AMD
AMZN
DAL
DOCU
MRK
MSFT
NET
RDS.A
SAVE
XERS

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I'm curious why RDS.A instead of XOM. I have some cash that I'm looking to put into a high dividend yield stock and both of those are among the ones I'm considering.

RightWingConspirator said:

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I've thought about options, but I am hoping to hold on to the underlying for three to five years. These aren't swing trades for me.

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Options can be useful even for long-term investments. For instance you could buy ITM calls for a stock that you think will go up. Buying ITM instead of OTM or ATM reduces theta decay as you get closer to the expiration date, so it mostly tracks the gains of the stock. However since your initial investment is a fraction of the stock price instead of the full stock price, the percentage gains (or losses) are higher. Once the expiration date comes you can sell some of the options if you want, but let the other ones exercise and take possession of the stock shares for long term hold.

You could also sell puts as a way to pocket premium or enter a stock at a lower net price than you think the stock will be in the future and then hold those shares long term.

UPS and FDX up this week. Really impressed with new CEO of UPS. Carol Tome, formerly of Home Depot and the first non UPSer to become CEO is making a splash. Of course it helps with record package volume during pandemic.

RightWingConspirator said:

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Yes, but my account is relatively small right now. Most of my money is managed by Merrill and Fidelity, but my trading account has about $50k in it for me to play around in the market some. Selling puts is a great idea if it wasn't for the fact that if the stock is "put" to me, I don't have sufficient capital to pick up 100 shares of a 300-400 dollar stock. At least not yet.

When oil stocks sold off, I started moving more money into my trading account to take advantage. Right now my trading account has a return YTD sitting at ~72%, so I am looking to move more in with a cap at about $100k. I've been fairly methodical and don't want to get too cocky. I've lost my shorts before and would like to avoid that. Wouldn't we all??

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For your consideration only, from a 30-year non-professional option trader:

RWC - - he said buying protective puts, which is the opposite of what you're discussing.

Fig - - Starting with covered calls is a good way to learn the mechanics, expirations, the spreads, and trading patterns. The good news is that they actually reduce risk, instead of increasing it, if done correctly.

In most cases, the next frontier in options trading is buying naked puts or calls - - easy to understand, as you have a known downside, and either unlimited upside (calls), or significant upside (puts, in which returns cap out at a theoretical zero value of the underlying stock). Buy calls if you're bullish, buy puts if you're bearish. Select an expiration that gives your investment premise time to materialize. In either case, you can simply place a bet with a small amount you can afford to lose, and either lose it all or have significant gains.

The trick is having an exit strategy, and understand the time decay element of the option (time is your enemy). My general preference is to sell half when a position doubles, and decide what to do from there.

All the advanced strategies get more complex, with the main upside being that you can define a sweet spot where you make money while minimizing risk. The main downside is that you're piling option premiums on top of option premiums (and possibly commissions), which may impact your returns, and you really have to watch them closely to ensure you hit your optimal exit points. Unless you're able to track fairly constantly, you might be better off with a simpler approach.

Honestly only because I'm already so down on Shell. Just cannot sell right now and take those losses. That's all.

Great info, thanks!

WDC is approaching support between 36 and 33.74 from the past 8 years. This might be a good time to look at leaps as a cheap buyin for rebound potential that might take awhile.

The $45 calls for 1/2022 are close to the March lows. I've got a buy order in for that $5.50 that was the lowest it got to. We'll see if that fills.

I bleed. I misunderstood the protective part. I was thinking selling puts on equities you wouldn't mind owning. Admittedly, there is much to learn on the option front, but I got little response when I created a thread on that very topic.

I would try to answer you, but I'm afraid I'd provide incomplete or inaccurate information. I'll try to find that thread and post some links. If you read through OldArmy's posts on tue trading thread you will learn quite a bit. Your brokerage firm likely has a learning center that would be helpful. Also there is some helpful information on wikipedia related to technical analysis, options strategies, and Black-Scholes model.

I'm pretty clear on Black Scholes, protective puts/calls and what happens if you write a put or a call and the risk associated with each. My issues are more practical in nature. I'm buying a call/put at the ask, just like in a stock, correct? I'm selling at the bid price?

I've punched a few option contracts into the trade screen, but what's confusing me is what ML Edge is telling me. Take for example the following contract for GOCO:

GOCO#L1820250000 - it's a call that expires on 12/18/20 with a strike of $25. It is showing me the following: Last - 0.65; Chg - <0.60>; B - .45; A - .75; V - 7; OI - 24

Looking at the numbers above, I would think I would pay a $75 premium to buy this option, and if it expires worthless, I'm out $75. But ML is showing me that my max loss potential is some $1600 or so. It asks me for a limit price, but not sure i know what that means in the context of an option order. But are they asking me the limit price for when the option is exercised? Wouldn't that be the strike price?? Is it a limit price on the ask price for the option contract? Why is my loss potential $1630?

It's also asking me about "Leg 1 and Leg 2."

This is the stuff I'm not sure about. Any help is appreciated.

RightWingConspirator said:

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I'm pretty clear on Black Scholes, protective puts/calls and what happens if you write a put or a call and the risk associated with each. My issues are more practical in nature. I'm buying a call/put at the ask, just like in a stock, correct? I'm selling at the put No - the BID price?

I've punched a few option contracts into the trade screen, but what's confusing me is what ML Edge is telling me. Take for example the following contract for GOCO:

GOCO#L1820250000 - it's a call that expires on 12/18/20 with a strike of $25. It is showing me the following: Last - 0.65; Chg - <0.60>; B - .45; A - .75; V - 7; OI - 24

Looking at the numbers above, I would think I would pay a $75 premium to buy this option, and if it expires worthless, I'm out $75. But ML is showing me that my max loss potential is some $1600 or so. If you're buying the call, your max loss is the full premium ($75 in your example). If you're selling a call, your potential loss is theoretically unlimited. It asks me for a limit price, but not sure i know what that means in the context of an option order. I ONLY place limit orders for options - they work just like buying or selling a stock. Because of the inherent volatility and wide bid/ask spreads for options, it's way too risky to trade market orders for most options. But are they asking me the limit price for when the option is exercised? No - you're just setting a bid price for what you would be willing to buy the option for. Wouldn't that be the strike price?? No - see above. Is it a limit price on the ask price for the option contract? No - if you're buying, you're setting a bid price - someone else has to lower their ask to your bid in order for the trade to execute. Why is my loss potential $1630? I don't know, but I suspect you hadn't input "buy" or "sell" yet, so it gave you an answer for a multi-legged option (as you indicate below).

It's also asking me about "Leg 1 and Leg 2." You might have selected advanced option trading, or the broker defaults to that - - if you just want to buy a naked call, you just input one leg.

This is the stuff I'm not sure about. Any help is appreciated.

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I'll try to answer in bold above. Remember, I'm not a professional.

I bleed. Yes, the bid price, not the put price.

I'll check and see if it is defaulting to a multi-leg option. Your answer is most helpful. I've got a few shares of GOCO which is really a swing trade for me. What are your thoughts on the option contract referenced above? It never has to go in the money for me to make money on the option, correct? As long as it moves higher than it is today and the time decay doesn't chew up most of the value. Did I understand that correctly?

I somehow ended up on the multi-leg option portion of the trade screen. The simple option portion is much easier to follow and has cleared up the confusion I had.

Thanks, guys. Appreciate the help.

RightWingConspirator said:

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I bleed. Yes, the bid price, not the put price.

I'll check and see if it is defaulting to a multi-leg option. Your answer is most helpful. I've got a few shares of GOCO which is really a swing trade for me. What are your thoughts on the option contract referenced above? It never has to go in the money for me to make money on the option, correct? As long as it moves higher than it is today and the time decay doesn't chew up most of the value. Did I undnwrstand that correctly?

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That's the one thing I won't do - I can't tell you if it's a good thing to buy or not - that's a decision only you can make. Understand, this is a form of speculation, and I'm just generally uncomfortable giving advice on how to speculate.

I will say that I sometimes post what I actually trade in, on this thread. I'm not endorsing it, but mainly looking for feedback from others.

As far as the option mechanics themselves:

Yes - your premise is mostly accurate. The main decision on speculative option buying is to find a risk tolerance level you're comfortable with - - in the money options are clearly less risky than out of the money options, but also provide less leverage, per dollar of price movement. Only you can decide which alternative fits your situation better. Incidentally, I'd guess that almost all (95%+?) of the option positions noted on this board are sold before expiration, so after buying a position, the strike price and expiration are basically considered pivot points to determine your option purchase price, and not intended to be actionable levers.

I will say that I usually write covered calls just slightly out-of-the-money, to get more option premium - writing them in-the-money kind of limits their purpose, unless you really want to get rid of the stock (in which case, selling the underlying stock might be the better play). I write covered calls on stocks I like that I believe have near-term downward potential (usually due to a recent runup), but, to each his/her own.

I bleed, thanks, bud. I wasn't asking so much whether I should buy it, but more wanted to check my understanding that an option never has to go ITM for a buyer to make money. I believe you confirmed that for me. I appreciate it.

Best high dividend yield stocks... and go? I have some free cash in my HSA and that I moved from a savings account after I hit sufficient emergency funds elsewhere and the bank dropped interest rate below 1%

AGSmith said:

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Best high dividend yield stocks... and go? I have some free cash in my HSA and that I moved from a savings account after I hit sufficient emergency funds elsewhere and the bank dropped interest rate below 1%

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Ohi
Sdiv
Xom

Are mine

RDS cut their dividend heavily so if you want an O&G major dividend play then XOM makes most sense

Question for the board as it pertains to the market with people's income.

Have any of you or your spouses received your work from home plans ? My wife's company decided that If you have kids that can't attend school in person, you can work from home at a 50% pay cut.

They're a large company so it more places take this approach I'm thinking it's either going to force schools to open or a lot of incomes are about to be hit further.

Sounds like a company I wouldn't want to work for that may end up learning that the hard way.

I'm at a small company, but since the beginning they've been very understanding that you're doing what you need to and some days won't be as smooth as others, especially for employees with kids.

Hey I'm late to the discussion but I bought similar GOCO $20 calls with March 2021 expiry. In one of OA's posts he said he thought goco would pop after their 1Q21 earnings. Right now that March call is the furthest out you can buy. when they come out with a longer call, I'll just roll the option forward.

I tend to limit my speculation $$ and as much as i respect OA, buying goco (a stock I know nothing about) after reading about it on TA is definitely speculation.

Agreed K_P. I figure for the cost of a call, I'm willing to lose the entire amount to speculate. It would be a relatively small loss I can live with.

I was surprised as the company has solid metrics and no work has suffered from being mobile, but it's a midstream, and regardless they're some of the last to adapt away from the old school style.

I work for a large healthcare company and their attitude has always been "we don't care what you are doing or where you are as long as your work is getting done" .

Don't want to clutter the thread just wanted to get a feel for this being a wider phenomenon to prepare for holdings wise.

PLUG up to 11.25. Goodness.

third coast.. said:

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I sold wednesday and it went up 18% Thursday

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Trying to decide if I want to buy more. Trying to preserve cash but I'm getting intrigued here.

AGSmith said:

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Best high dividend yield stocks... and go? I have some free cash in my HSA and that I moved from a savings account after I hit sufficient emergency funds elsewhere and the bank dropped interest rate below 1%

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VZ

NIO crushed it. Been as high as 15.50 after taking off from just above 14.50. Perfect Model T so far just above 15. Curious if it holds... if it does and takes out 16, it could really squeeze. For long term, this report is incredibly encouraging.

https://www.globenewswire.com/news-release/2020/08/11/2076134/0/en/NIO-Inc-Reports-Unaudited-Second-Quarter-2020-Financial-Results.html

https://seekingalpha.com/news/3603873-nio-zooms-8-on-earnings-beat

Confucius said:

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You had a hell of a month if you picked the stocks recommended by 59. Mind if I ask what steps and setup you are looking for in order to enter into a longer term trade?

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Sorry just now getting a chance to reply. Two things really that aren't very complicated... First, look for what you think is value in a growth stock. Second, do some research and mostly find some proven sources to follow who know their sh*t better than you do. For me, it has mostly been oldarmy1 and Scott Redler. I'm trying to add some more as I accumulate more positions.

The other main thing is patience. For example, I was totally sold on ROKU in Sept 2018 when it was over $70 but it had been on a crazy run so I waited until it went under $50 to buy. That was my plan. I averaged in around $44 and was a bit early as it got crushed in the crazy December 2018 sell off. I didn't panic and just left it alone. The growth stocks like that and SQ for example will give you opportunities. They'll go on tears of 3x+ for months and then get cut in half in a blink of an eye. Know your time frame. If long term, don't sweat the ebbs and flows if you've done your homework.

I also don't get caught up in trying to perfectly time these. For example, I started buying AMD about $54 and was down about 10% at one point in late June.

I also avoid stuff like biotechs, penny stocks and oil & gas. Just too many binary events driving those companies.

So the groove I've found is pretty simple, and I sleep way better at night.

• Look for growth names that are on sale. Preferable a disruptor to the status quo. Also look for strong visionary CEOs.
• Be patient for entries but don't beat yourself up over imperfect timing.
• Don't panic sell.
• Don't over-trade, over-analyze or over-complicate.

Since we all like to only post our wins, I'll mix it up and post some names that either totally failed or ones that got away. They're not all going to work out, and that's ok.

• DBX - I thought this was a slam dunk when it went <$30 in 2018. Boy was I wrong. I was really patient with it, but it just never worked out. It is profitable and would beat earnings over and over, but just kept going down. I held for over a year and decided to fully cut bait about a year ago around $20 taking about a 30% loss. I did it because I wanted to salvage that capital so I'd have it ready for SQ.
• DOCU - I was always sold on this but thought it was a bit risky. Almost bought several times <$50 but never pulled the trigger. I think it was PTSD from DBX. That DBX capital just almost went into DOCU ~$45 last August. I waited for SQ instead which was not technically a mistake, but DOCU would have outperformed.
• OSTK - ugh. Almost bought a load ~$5 but again thought it was a tad too risky. Man, this one would have pulled my retirement in a few years

59 South said:

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Since we all like to only post our wins, I'll mix it up and post some names that either totally failed or ones that got away. They're not all going to work out, and that's ok.

• DBX - I thought this was a slam dunk when it went <$30 in 2018. Boy was I wrong. I was really patient with it, but it just never worked out. It is profitable and would beat earnings over and over, but just kept going down. I held for over a year and decided to fully cut bait about a year ago around $20 taking about a 30% loss. I did it because I wanted to salvage that capital so I'd have it ready for SQ.
• DOCU - I was always sold on this but thought it was a bit risky. Almost bought several times <$50 but never pulled the trigger. I think it was PTSD from DBX. That DBX capital just almost went into DOCU ~$45 last August. I waited for SQ instead which was not technically a mistake, but DOCU would have outperformed.
• OSTK - ugh. Almost bought a load ~$5 but again thought it was a tad too risky. Man, this one would have pulled my retirement in a few years

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I bought OSTK back at $7 and then dumped it a month later for a loss...I just try not to look at posts on that stock

I sold 500 shares of FB at 35

yukmonkey said:

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I sold 500 shares of FB at 35

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Understanding virtually nothing about the FB business, I bought 100 shares the same day as their IPO, and almost sold for a double when I anecdotally heard that younger people were abandoning it, leaving just lame baby boomers as clients.

Then I decided to hold it as the value of their advertising approach became evident (in my daytime business life, I was repeatedly told that FB ads outperform others by a wide margin). Now, I just consider it a core holding that I will likely keep till retirement. Up 587% so far, demonstrating the value of buy-and-hold, if you give it enough time.

I bleed maroon said:

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yukmonkey said:

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I sold 500 shares of FB at 35

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Understanding virtually nothing about the FB business, I bought 100 shares the same day as their IPO, and almost sold for a double when I anecdotally heard that younger people were abandoning it, leaving just lame baby boomers as clients.

Then I decided to hold it as the value of their advertising approach became evident (in my daytime business life, I was repeatedly told that FB ads outperform others by a wide margin). Now, I just consider it a core holding that I will likely keep till retirement. Up 587% so far, demonstrating the value of buy-and-hold, if you give it enough time.

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Been in and out of it as well, but now consider it a core. Instagram and Whatsapp also bring it a ton of value from different demographics.