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Thompson Creek Metals Company Inc. Message Board

  • retaoba retaoba Jun 11, 2013 12:24 PM Flag

    You have 10k to invest right now - What choice do YOU make, and why?

    Fun exercise for newbies and vets on here. With 10k to invest in TC, what which option would you buy, and why? If none of these, but something different, again, what and why.

    I have used the current ASK prices as of today for a reference.....assuming no brokerage
    Risk goes from high to low, obviously, as does the commensurate reward.
    Of course, it depends on your personal situation. For those of you with no common stock right now, I would probably buy the common first, option 4. That's just me.

    I already have a nice core position of common and some deep in the money and deep in time calls, so I would choose option 2, with a palatable time premium and decent leverage. Option one, while appealing, is a little more risk than I want to assume, although I do feel you have a better than even shot of doubling your money with option by expiration, and that is something to consider!

    1) Buy 500 (50,000 shares) of TC DEC 2013 $5 strike calls @ $0.20 each?

    2) Buy 117 (11700 shares) of TC JAN 2014 $3 strike calls @ $0.85 each?

    3) Buy 45 (4500 shares) of TC JAN 2015 $2 strike calls @ $2.20 each?

    4) Buy 2941 shares of TC common @ $3.40 share each?

    Sentiment: Strong Buy

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    • if you had followed me in to BMIX yesterday---when i told you about it you would already be up on it by $3,300.00 FYI

    • Put it unda the mattress?

      Sentiment: Buy

    • Well so far, I have to go with lightdoesnotage for the most creative answer....he really got me with the statement "but if it was my mom's money" lol...gotta love that thinking!

      Dtimepalm is interesting as well.

      Kind of liked seabrook7001's answer...tradeing some risk for a nickel is not a bad idea at all...

      Dragonlegal seems to have given this a lot of thought, but I thought that ultraific2 would want to go with more leverage as he has dissected this play inside out, and backwards too.

      Sentiment: Strong Buy

      • 1 Reply to retaoba
      • I certainly hope everyone is paying attention and using this opportunity (gift, really, is what it is) to cherrypick some more common, options, spreads, what have you.
        I just can't see the price being this low for much longer, certainly not after the Q2 conference call.
        Thank you, thank you, thank you dear Federal Reserve and the downbeat mainstream media for this opportunity to pick up some amazing values right now.

        Sentiment: Strong Buy

    • Okay here is a twist buy $1000.00 royal gold, buy $4000.00 of the common and buy $5000 of the preferred common (tmeds). Its preferred because you get paid to wait 11 percent dividend and it converts to the common. But what ever you do just buy it . Time is running out and once the mine opens these prices will be so cheap today. Its like the under 4 percent home loans one day soon they will be 6 percent loans or more.

      Sentiment: Strong Buy

    • option 5

      buy 8000 shares of TC common at 3.40 and at the same time sell 80 contracts of Jan 2015 $2 calls for 2.20 each. This costs you $9600 and makes you a profit of $6400 if TC trades above $2 at the Jan expiration. You don't lose any money until TC drops below $1.20.

      Spend the other $400 on beer.

      • 1 Reply to lightdoesnotage
      • dragon_medical_department dragon_medical_department Jun 11, 2013 4:52 PM Flag

        Not sure I follow you lightdoesnotage? The way I read this, you only have $10k to work with, yes? So you cannot buy 8000 shares at 3.40 (unless you assume some level of margin, which is a non-starter for many investors.
        You initial outlay is $27,200 for the common.
        Your premium would be $17,600 from selling the calls.
        The difference being $9600 in cash spent, true.
        (That is assuming you can get $2.20, the bid is $1.6 and the ask is $2.2 currently. so that's not a sure thing, $1.90 is more likely...)

        Assuming you hold until expiration and are "called away" at $2, which seems likely.
        You make $2 per share on an investment of $1.20 per share...not bad.
        About a 66% gain in 18 months or so is normally pretty sweet.
        Even a much lower and more likely 33% gain (selling the calls for $1.9) is usually nothing to sneeze at for a low risk trade...

        But I would question that strategy when you can just buy and hold the common for a likely 100% - 200% gain, even if it were to take 36 months instead of 18....
        A pps of $6.8 to $10.2 in 36 months does not seem that unlikely, does it?

        Or am I just drinking too early? :-)

        Sentiment: Strong Buy

    • I'd suggest an alternative option: Buy 222 contracts of TC JAN 2014 $4 strike calls @ $0.45 as the ask for option 1) has since risen to $0.25 thus reducing the number of contracts purchased to 400. The JAN 2014 $4 call options are still OTM but less risky than option 1).

    • Stick w. the common. It will never expire on you. :)

      Sentiment: Strong Buy

    • Hmmmmm....
      I would likely go with #3, the TC Jan 2015 $2 calls, even though I would try to get them cheaper. Maybe $2 or so.
      Fairly conservative play with decent leverage imho. I like the common, but I like the leverage more and while it's nearly impossible to predict prices with all this metal price point fluctuation and conflicting economic forecasts everywhere you look, the bar is awfully low. All TC has to do is bet the mine running by year end, and within a year it should at least be trading at or near book value, even if metals prices stay low, yes?
      I would probably take the profits before expiration and look for a dip to roll into the common, or take a position on the Jan 2016 calls.

      Although I have to say the price point on option two is very tempting. $3.85 basis for January? I might split my money 50/50 option 2 and option 3.

      Option one appeals to my Jack Links Wild side, but I am not sure I could go all in on that one. If everything went perfectly we'd be around $6+, and talking a grand slam home run there....if everything went perfectly...

      Sentiment: Strong Buy