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EZCORP, Inc. Message Board

  • wdcrestzoo wdcrestzoo May 22, 2007 8:22 PM Flag

    4 Days Left

    In the Texas Legislature. No meetings in House or Senate scheduled for our Bills.

    Some follow thru for the rest of the week would be nice. That is probably being greedy. Nice to see us at $15. Still cheap until the high $16's IMO.

    Wonder where Junky is?

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    • I had a long discussion with my broker about this one. There's simply no logical reason why puts are classified as "covered" when there's a corresponding stock position with the same exposure. It seems as if somebody who meant "calls" wrote "options" in the regulations. The concept has no regulatory meaning, but I talk about "Cash-covered puts" when I sell puts and deposit the money to buy the stock in an interest-bearing account at the same time.

      My broker is fond of selling deep out-of-the-money puts in parallel with a covered call position (I pay an annual fee rather than commissions). In case of disaster, the stock part of the covered call is sold at about the exercise price of the put (this makes me very nervous, but he does it with his own money as well as clients' money)

    • I believe that is what happened. He was long a bunch of IIG stock on margin and buying more as the price went up and gave him more buying power. On top of that he was selling puts and treating them as free money - if the stock went down short-term it would just lower his cost basis in newly acquired shares. But obviously he failed to account for volatility. Stocks which have had big price moves often have signficant corrections as well. In this case IIG corrected all the way back to the 200 and despite all the due diligence he had done on the stock it was all for naught. I really enjoyed reading his posts. That's the value of diversification.

    • Selling Covered Puts is one of the worst options strategy because you are a creating correlated risk. (e.g the puts move down in lockstep with the stock)

      This is great way to generate staggering losses, if something should go wrong.

    • wdcrest,

      You said, <<Wonder where Junky is?>>

      I am selling a part of my company and I'm working so hard on the divestiture that I haven't read very much on this board for a month...I hope to close the deal shortly and get back to playing around with EZPW.

      I'm glad the TX legislature is working out about as expected...that should take a lot of pressure off the stock.

      • 1 Reply to ezpwjunky
      • Hey Junky,

        Good luck on the sale. Hope you are making big bucks on your company!

        Are you getting close to break even on your call Options?

        For a safer long term investment, I still recommend Selling in the money Puts on crazy pullbacks. Dec $15 Puts could be sold for the mid 2's just a week ago. You make money above $13/share in December...pretty safe bet.

        Still very much long on stock and sold Sept puts.

        This stock is still cheap and money to be made in stock or options.

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