A couple of weeks ago, hotpanera2 contended that a stock like MSFT just didn't have 9%-type drops within 60 days that would cause wipeouts of a bull spread strategy. But looking at the stats, the stock within the last year certainly HAS had such percentage drops - and a lot worse. In late January of this year, the stock was at $28.87 but at March 18 expiration, it was down to $24.80, a tank job of 17%.
On 4/29/10, MSFT closed at $31.00 but two months later on 6/29/10, it was just $23.31. That was a collapse of almost TWENTY-FIVE percent.
There have also been a number of drops of 5% or more. And whereas it would take something like a 9% drop to wipe out a F play such as the 14/15 he proposed, with a higher-priced stock like MSFT, just 5% or 6% does the trick. If he does a 25/26 spread with the stock at $25.25, just a 5% stock slide takes MSFT below the low end of the spread and results in a TOTAL WIPEOUT.
Needless to say, if this happens more than just very very occasionally or there is something like even a 3.2% drop that would lose half the investment, the strategy on balance just won't work over the longer haul.
In my next post, I will review the recent evidence.
> The aims I have in mind are to inform and to educate.
I see I'll be spending more for detergent this year 9-Jan-08 01:35 pm
I keep creaming in my jeans just watching the spectacular action of Pfizer this new year in the face of such an awful market.
Re: Give it up, Ruffnuts. As long as there are humans on the 50 minutes ago
Do lesser-light riff-raff qualify as "humans?" The species mainly found on this board is like modern-day Neanderthals.
Re: Why Pfe turned down 21-Mar-11 05:45 pm
Unlike my women in Vegas, pencils are cheap and I tend to go through a lot of them. And with the pencils, I don't even need to provide for protection.
Re: has anyone noticed 3 minutes ago
Some folks have my back. Others though have my right middle finger.
Re: it's amazing them alan they dont want no part of us... 7-Mar-11 12:19 am
I never had much use for old ladies other than perhaps my mama and her sister.
I don't want OLD ladies - I want YOUNG ladies - especially those that are "of the evening." I like the girls that work.
The lame lying loon is extremely unhealthy, obese, lazy, sick & sluggardly, so odds are won't survive more than five more years of miserable, meaningless existence, instead of the 15 years a normal male American of his age could reasonably expect.
Everyone here knows that your description of the above fits you like a glove. We all know of the dejected life you lead as being on this board as much as you are doesn't allow you any time to enjoy life. Quit pulling the wool over those that can read you like a book.
People that posts as often as you and with as many aliases as you have, is not well balanced. This is certified by the number of messages that emanates from you with one aim in your mind.
I sense that the readers here are developping an affinity to me because I tell it like it is.
I have a calling and the Man Upstairs wants me to deliver the Good News to seniors about naked puts at my brokerage using cash as collateral.
I don't think I'll be kicking the bucket quite as soon as you may think. Not when there are so many deserving seniors out there that just don't know how easy it is to earn 15% a year with safety instead of settling for 3% CD's if even that.
Moses will once again lead his people out of BONDage.
I filled in the blanks and the median comes out to be 83.1 years.
When I got my reverse mortgage last September, I had to pay 17 years and 5 months of prepaid loan servicing fees as actuarial tables had me living until February 2028.