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Hi Sash
With Covered Calls are you covering the downside if the stocks fall too far?
Cheers
BC
...We applied to sell the whole thing down today, take what we can get, clear the margin loan and the concentrate on the evaporated equity from our IP's.
I know that we are not the only ones who have tried, and will no doubt try again.
Better to have tried than never to have tried at all...
Thanks heaps,
GeeVee
Hmmmmm.....Sunfish....I think I would make a very unattractive women...as I am a guy...
Maybe I thought of "Sasha".
which is actually a boys name (african bushman) for "good water".
but i digress ... 1/3 built house over the road for sale today "for sale as is ph xx". builders were working on it just last week. i wonder what went wrong - will have to plug into the local gossip. i wish them luck as NOTHING is selling here at the moment.
makes one realise that things ain't so bad for us.
No...I have factored another 20% drop in and still come out 20% ahead.
The stocks I invest have already fallen 25-35% so another 20% is alot particularly as these companies are very profitable. Even when they have fallen 20%...they have recovered most of the fall in matter of weeks. I am planning to hold these stocks for the longer term so I am not worried about short term fluctuations.
I started with 32K...I now have about 90K in stock based on todays prices. Of this 55K is borrowed. I reckon if I can get preimums of 2-5K per month...I should hold about 100k of stock with 35k in borrowings by June 2009. This is not a bad return on a 32k investment...is it?
I am writing call against WBC and NAB.....NAB gives brilliant premiums but a tad riskier.
Cheers
Sash
Firstly:
Lets assume i like ANZ, and i think its good value at say $17. In order to avoid missing out of the stock i pick up my first parcel at $17. However being the type of person thats happy to dollar average down, with the logic that a price less than $17 represents even better value, i take out a put option at say $15.
I get paid the option price, and in the event that it hits $15 i have to acquire the stock (which works out at $15 less the price of the put option).
Is this correct?
2nd:
Is it in my interests to pick up some longer dated put options. I realise the risk is higher because of the increased time factor, but isnt the option price also higher to reflect this increased risk. If i was happy to acquire the stock anyway, does this strategy make sense?
3rd:
How do i go about getting put options?
4th:
Now lets go the reverse way. Assume i am nearly fully invested, i am happy with my share portfolio but i want to hedge against a future major downswing, especially say around Jan09 when earnings results for the US and Australia come out. Is there a ASX200 call option? whats the underlying value for? and is this an effective insurance scheme (i realise that i am not fully covered unless my portfolio replicates the ASX200 exactly).
Help much appreciated.
Wow..this thread has headed into another direction...cool!!
I read the Thrillionaire, Nik Halik and he talks about being a share lord, which in Aussie terms seems to amount to writing covered calls.
Sash, did you do a course? Or is it something you study and move into?
Thanks.
BTW we are out of the market, licking our wounds.....
The idea is to buy a long term, at the money PUT when you buy the head stock. Then write short term covered calls each month.I did one of the three day courses a few years ago. It was still a basic "writing covered calls" one but I never felt happy with the idea because I foresaw this chaos and writing covered calls leaves one fully exposed to the drops we've suffered.
Can be used as either gender... more commonly male in Eastern Europe and is almost exclusively used for girls in the US. It comes from the Russian form of Alexandria.which is actually a boys name (african bushman) for "good water".
Geevee, you're brave to post your story. I can feel your pain.
So last week Suncorp sold all my units. It was a tough decision to make not to meet the margin call. It was only our first margin call. The unit price has dropped by 75%!!
We invested $50k in June 06 and lost about $40k, received about $10k in dividends. It's just not worth it. Thankfully it's not tied to properties. I figure, you can always buy back again and make money in a rising market rather than pick a bottom...that's dangerous.
My shares portfolio is also down 50%.
it's a tough lesson to learn.
Being religious, we prayed for our answer and it was the right thing to do. If we had made the margin call, we would have received another one days later.
But funny how things work out, we got a valuation on our property on Fri as we plan to sell it and it has came back around $50k above my expectations. God works in mysterious ways.
On the same day, our agent from Adelaide phoned us about the farm my uncle left us. I thought it was only 2acres but it's actually 10 acres because he owns the block behind aswell. Even my uncle and aunty is looking out for us from heaven.
Chilla
I am not giving you financial advice ....but this is what I am learning...
1. You could write puts where you agree to buy a share at a particular price to get you started. You also get paid a premium for this.
2. When writing calls or puts....ideal time frame is 4-6 weeks from expiry...this maximises profit (premimums).
3. Brokers like CommSec have both phone and online broking services. My preference is to use phone broking. I use Morrison's Securities....they are very cost effective $44 for buying stocks under 40k value and options premium under $8.
4. Not sure about the ASX200 options....ask a broker.
Cheers
Sash
I attended a lot of the beginners seminars of the spruikers....the rest I read up on via a couple of books. I then paper traded for a year....hooing and haaing...contemplating my navel!
It was then in Aug. 2008...I entered the market. I have only concentrated on Covered Call.....I would consider writing puts...but not really motivated to do the more complex trades....too lazy!
I like to keep it simple.
Geevee, you're brave to post your story. I can feel your pain.
So last week Suncorp sold all my units. It was a tough decision to make not to meet the margin call. It was only our first margin call. The unit price has dropped by 75%!!
We invested $50k in June 06 and lost about $40k, received about $10k in dividends. It's just not worth it. Thankfully it's not tied to properties. I figure, you can always buy back again and make money in a rising market rather than pick a bottom...that's dangerous.
My shares portfolio is also down 50%.
it's a tough lesson to learn.
Being religious, we prayed for our answer and it was the right thing to do. If we had made the margin call, we would have received another one days later.
But funny how things work out, we got a valuation on our property on Fri as we plan to sell it and it has came back around $50k above my expectations. God works in mysterious ways.
On the same day, our agent from Adelaide phoned us about the farm my uncle left us. I thought it was only 2acres but it's actually 10 acres because he owns the block behind aswell. Even my uncle and aunty is looking out for us from heaven.