Wed, Aug 27, 2014, 8:16 AM EDT - U.S. Markets open in 1 hr 14 mins


% | $
Quotes you view appear here for quick access.

Warner Chilcott plc Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • headhunter80904 headhunter80904 Aug 24, 2010 2:27 PM Flag

    Consider the margin gain.example.

    <<You buy pay 1000 sh put $8500 0n margin.Div covers margin and yes stock will adjust but your off margin and have WCRX 100% owned for the future growth gain which looks strong.WCRX could easily get back to $30 in 1or2 quarters. >>

    But, if I'm understanding your margin buy correctly, what did you really gain by buying on margin? Consider the following scenario using PPS rounded to make calcs easier: You buy the 1000 shares at 28.50, using $20k cash and $8.5k margin. On Sept. 8, you collect the $8.5k divvy (and your margin is paid off), and on Sept. 9, the stock goes back down to 20 (plus any divvy run-up that's occured). Your gain was only the divvy run-up, less the margin interest paid on the $8.5k.

    If you paid all cash, you'd have the whole divvy run-up. (Of course, maybe you could buy 25-30% more shares using margin than just cash . . .)

    If you're looking ahead to the next 1-2 quarters, when you think it will easily get back to $30, then why not just buy in the post-divvy drop, and save the interest, and save yourself the ride on the roller coaster.

    Just a thought . . .

22.930.00(0.00%)Sep 30 4:00 PMEDT

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.