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Sturm, Ruger & Co. Inc. Message Board

  • eddyroth Nov 28, 2012 5:05 PM Flag

    If you were long a call........

    Jan55 , would you sell before ex div, or hold out?
    Need opinions on this one. Strike will reset to 50.50, but stock price will go down as well......

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    • If you have an extra 2 minutes, could you explain what a call and strike are? Thanks

      • 1 Reply to moss843
      • A call option is the right to buy a stock, for a premium, at a date in the future, at a specific "Strike price" . For instance the Jan 55 calls. I have been buying those for around $1 to $1.50. If I buy 10 Calls for $1.50, it will cost me $1500 (controlling 1000 shares of stock effectively) for the right to effectively buy the stock at $55 and sell it at a a higher price. They buyer has the right to call the stock away from me at $55. I therefore keep anythng above $55. I then need the stock to be worth at least $56.50 ($55+ 1.50 paid to break even). Today my Jan 55 calls are being price at about $5. Meaning Ive trippled my profit of say $1500, now worth $4500. Since they are being priced at $5 today the market believes the stock should and is trading near $60. If....RGR is trading at $65 in January (Low!), the options will be trading for $10. You can sell your option at any time and do not have to hold into the date you own(Jan).

    • I own a #$%$ load of those as well. Hold. Or sell 1/3 if youve trippled your money. This COULD be a $70+ stock in January making them effectively $15. Today they are $5+. Dont concern yourself over the div payout. they will reset the strike prices. Keep you eye on the ball. We go alot higher by Jan IMHO. Always take profit if you are uncomfortable losing your gains.

    • shortssqueeze_expert_no1 shortssqueeze_expert_no1 Nov 28, 2012 5:12 PM Flag

      I don´t think you see the big sign here !?
      It´s a huge shortsqueeze coming up. Shorts can´t find stocks to cover their pos.
      Why then put stocks in the market - instead of let them run after them AND pay dividend ?

      Dividend could be a double trigger for longs, if we play the game correct.

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