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Pfizer Inc. Message Board

  • eureka201112 eureka201112 Nov 1, 2011 10:20 AM Flag

    My down-on-his-luck best friend has a lot of acquaintances and loves to talk

     

    He hates the stock market but finally agreed on Sept. 30 to give me five grand to invest for him in BAC naked puts. I'm investing on a best-efforts basis in my account with no guarantees and I'm allowing him to keep all of the expected profits as I know that if I do well, a lot of folks are going to know about it through him and I'll be hearing from folks that want to go into loan arrangements where I get a cut of the profits. Here is how things have gone so far:

    1) Sold 82 of the Dec. 3-strike naked puts for BAC when the stock was at $6.90. Sold the puts for $10 each off of a bid of $10 and an asked of $11. Proceeds of $820 gross and $760 net. Cash requirements of $61 per contract or $5,002 for 82. Received cash from him in the amount of $5,002. Potential cash of $5,762 at December options expiry if held to expiration.

    2) Bought back the 82 contracts for $3 apiece when the stock was at 47.05 and the bid was $2 and the asked $3. Cost of $247 including a $1 transaction fee. Actual cash in the account at this point of $5,515.

    3) Sold 89 of the Feb. 3-strike naked puts for BAC when the stock was at $6.52. Sold the puts for $11 each off of a bid of $11 and an asked of $12. Proceeds of $979 gross and $913 net. Cash requirements of $62 per contract or $5,518 for 89. Potential cash of $6,428 if the position is held until the February options expiry.

    If the stock is above $3 at February expiry, the nominal return for five months will be $1,426 in profits on a $5,002 investment or 28.5%. It's 5.70% per month simple interest or 68.4% annualized - simple interest.

    These are THREE-strike naked puts and just look at that return. You can't earn that kind of return with such little risk anywhere else.

    This topic is deleted.
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    • Just as with the sicko's nail-biting, the OC loser is insanely proud of being mentally diseased, lazy, crazy, stupid, ignorant & entirely incapable of controlling his emotions & totally lacking in willpower or patience, the same traits & bad habits that have led to the numerically challenged, lying loon's financial destruction.

    • Correct.

      My shameless chubby hubby will never, ever admit to be wrong, no matter how much fact, logic or reasoning are dumped on his stubborn blockhead.

      Remember 2.9%? Margin of error?

      Same MO for numbers nincompoopery as for all other topics upon which the big fatso is eternally mistaken. First attack, then when shown incontrovertibly wrong, ignore.

      So there!

    • Thanks for posting that. When challenged with the facts, he'll tell you it's wrong, it's his way or the highway, once he makes up his mind he'll never change, or some variant of one or more of these.

      It's the same with how he dishonestly presents his results, ignores fees and penalties, calculates naked put returns based on margin, wants to ignore currency without understanding what that would mean, and all the rest.

      For those of us who spent decades being exposed to and involved in rigorous thinking and logical analysis, the contrast is stark. But since he'll never learn or change, the only reason to correct him is for the benefit of others who might care and might otherwise be duped.

    • No, we're using compounding to show that you're a Numbers Numbskull of the lowest order & an inveterate liar, using inflated claims when you have been shown for a decade that they are false.

    • In order to be taken seriously one must be precise in stating these matters; nonetheless, the goal is turning a profit


      Thulia

    • > Americans won our revolution by hiding behind trees instead of in open field conventional battle

      That's what happens when you get your total knowledge of history from Disney films and comic books as a child. I suspect Alan thinks Daniel Boone was Washington's Second in Command and Zorro was one of his Generals.

    • You remain a financial & mathematical moron. "Simple interest" has absolutely nothing to do with your idiotic, ignorant miscalculations. The only number that applies in this case has to be compounded, fool.

      When will you learn 5th grade arithmetic, lying loser loon?

      • 2 Replies to copromeccakide
      • <<You remain a financial & mathematical moron. "Simple interest" has absolutely nothing to do with your idiotic, ignorant miscalculations. The only number that applies in this case has to be compounded, fool>>.

        How true.

        When I was a first-year associate, some guy working for an insurance company called me and asked for 10 minutes of my time to make a presentation for a terrific investment. I was too young to hang up on such people, so I saw him. He basically (I forget the precise numbers) had some guaranteed vehicle under which I would earn something like 200% in 10 years. He claimed that that was 20% a year. I remember immediately asking him why he ignored the effect of interest and asked that he show me the compounded annual return calculation. That was a show-stopper. He left a minute later.

        It is absolutely irresponsible to give a return (even if calculated correctly) and then divide it by the number of months and claim that the result is the monthly return. Using "simple interest" to describe it (which sounds like one is UNDERSTATING the true return) only "compounds" the stupidity.

      • He's excited about getting a cut of profits on a $5k "investment".

        Talk about a minor, "mad money" type of "play".

 
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