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Intel Corporation Message Board

  • triad_4_me triad_4_me Mar 20, 2006 4:49 PM Flag

    INTC longs recipe for success

    Buy 1000 INTC @ $19.60 cost...........$19600.00
    Buy 100 PUT OPTIONS contracts JAN 07 VNLMD.X with a $20 strike price @ $1.8 cost.$1800.00

    Total invested in 1000 shares of INTC $21400.00

    The cost per share equals $21.40 anything over this is gravy.

    The most you can lose on JAN 19 2007 is $1400.00
    The stock might rise appreciably by then.
    If you believe in INTC this is the way to go.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • "If you are going to include opportunity cost, maybe include dividends received too."

      Good point.

    • You just said.................
      Triad the original post mentioned 100 contracts @1.80 per share. If you took option trading 101 you should know that 1contract is 100 shares. SOOOOOOOOOOOO
      100 contacts x 100 shares = 10,000 shares
      thus 10,000 shares x $1.80= $18,000
      SOOOOOO WHO IS WRONG?

      Have you been paying attention?
      Class dismissed.

      Again you are a little late.

    • "But OK, call it 3% opportunity cost. You're still at 9.6%, which is close enough to 10% for government work. "

      If you are going to include opportunity cost, maybe include dividends received too.

    • OK, We will settle at half your 3% opportunity cost. Half my way half your way. 1.5% it is.

      With that add $321.00 to the bill of $1412.00.

      That looks to me like $1733.00

      Total downside risk for a 1000 share INTC investment at a cost of $21.40 a share for 1000 shares. Buy put options at the $20 strike price @ $1.80

      Answer: Is it worth $21400.00 for 1000 shares of INTC guarenteed to be worth $19667.00 on Jan. 19 2007 or before. I am going to take that one.

    • "I just don't think you can add 4% to the equation."

      Not only can you, you MUST. Failure to consider the opportunity cost of tying up the money involved is an amateurish failure of analysis (which is surprising cobsidering your basic premise is otherwise pretty sound in its reasoning).

      "It is not money made."

      No, it is money that could have been made but NOT made. That's why it's called opportunity cost.

      In the worst case INTC never rises high enough to put you in the money and you end up out the $1412 (I am relying on your figure here) + the $856 you could have gotten in tbills.

      You could reasonably argue with the 4% and say it should be 3% since really it's 9 months, not 12. But tbills are already paying over 4% and I suspect they'll be going higher as the year progresses.

      But OK, call it 3% opportunity cost. You're still at 9.6%, which is close enough to 10% for government work.

    • I just don't think you can add 4% to the equation.
      It is not money made. If that makes any sense to you. 6.6% downside would be the difference between unlimited gains and 10% downside. But the total realized downside risk would be 6.6% or 1412.

    • Don't be a butt head. You have to include the 4% risk free you could otherwise earn on the cash.

    • Paul is your typical good old boy guy.

    • Buy 1000 INTC @ $19.60 cost...........$19600.00
      Buy 10 PUT OPTIONS contracts JAN 07 VNLMD.X with a $20 strike price @ $1.8 cost.$1800.00

      Total invested in 1000 shares of INTC $21400.00

      The cost per share equals $21.40 anything over this is gravy.

      The most you can lose on JAN 19 2007 is $1400.00
      The stock might rise appreciably by then.
      If you believe in INTC this is the way to go.

    • .... Buy INTC anywhere above $3 ...

    • View More Messages
 
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