Anyone out there that 1) likes gme at "these" prices and 2) can accept a 19% return?
Buy gme and sell Jan(09) $45 calls for a net out of pocket expense of $37.80. Owning at $37.80 to sell at a $45 strike yields a 19% 1 yr return. Not too bad to have a basis of $37.80 (especially if you currently see the low $50's/high $40's "as a bargain price" AND "if you can accept" a 19% return)... You also basically have protection against a downside fall of approx 30% ($53.70 to $37.80).
Not flashy or quick but a pretty nice trade (A $50K investment generates almost $9.5K with very little risk)...
"You know, I thought you were a reasonably smart guy until I read this"
--> 1) LOL... People with weak arguments &/or debate skills "always resort to trying to belittle". Thanks for acknowledging your weak argument. IRT being smart: It's like I always say: "Opinions Vary"... ;-) I guess if you're going to take the gloves off...
"You must know that in trying to make the big gain, you are increasing your chances of making a small gain (or taking a loss)."
--> 2) Yes, it's called Risk/Reward and is something that applies to everything that life has to offer; I'm glad you've at least been able to figure that out. Risk takers are the ones most likely to be entrepreneurs, inventors, CEO's etc. If you apply that lesson for the rest of your life you may find that amazing opportunities present themselves.
"In the long run, you will NEVER come out ahead with this type mentality."
--> 3) Wrong. See 2 above.
"I'd say "good luck" to you at this point, but I know over time that your luck will come ... and then go again."
--> 4) See All of the above + 5 & 6... ;-)
--> 5) Like I said before, I only use 10% (approximately) of my portfolio for speculation. "Leverage" and the "downside risk" that can be achieved via various option techniques actually provide a very good return for that portion of my portfolio. BTW, you shouldn't try to pass judgement on a given technique until you actually know what you're talking about. I'd say it's highly likely that you know very little about all the option strategies available (other than what you may have learned on Fast Money)...
--> 6) I'm already retired and don't need luck, but I'll take it. Thanks & GL2U2. ;-)
"That's exactly why...leverage.... At $35 it's a difference of 47% vs. 80%."
You know, I thought you were a reasonably smart guy until I read this. In fact, you are just playing games like everyone else on these boards.
You must know that in trying to make the big gain, you are increasing your chances of making a small gain (or taking a loss). In the long run, you will NEVER come out ahead with this type mentality.
I'd say "good luck" to you at this point, but I know over time that your luck will come ... and then go again.
"Your optimism in the face of adversity is impressive"
--> Perspective. I don't see it as adversity. I see opportunity.
"Why buy CSCO calls as opposed to just owning the stock? I think CSCO has a long future, but why leverage yourself and impose a limited timeline."
--> That's exactly why...leverage. I don't have to decrease my cash position/buying pwr as much by just buying the calls and by buying deep ITM calls I will benefit at a much higher rate of return than someone owning the stock alone. I can then invest &/or earn interest on the amount not "tied up" in the stock. Additionally, "if" they decided to pay a special dividend or start making qtrly div's I could always exercise my options to buy the stock and begin receiving it.
--> I don't see an option with "2 years" till expiration as "a limited timeframe". On a purely literal basis 2 yrs is obviously "limited" but in the stock market (and life for that matter) it's an eternity. If csco only went from $24.50 to $30 a stock owner would make 22.4% but that $11.30 option would be worth at least $15.30 (depending on when it hit $30) which is a 35.4% gain. At $35 it's a difference of 47% vs. 80%. The 2yr timeframe gives me time to wait out periods like the one we're in currently. Maybe If it hit those prices ($30/$35) by Jan09' the differences would be The higher the stock goes the greater the difference.
GITA(Good Investing To All)!!!
Your optimism in the face of adversity is impressive... I'm just not so sure it's well advised.
Why buy CSCO calls as opposed to just owning the stock? I think CSCO has a long future, but why leverage yourself and impose a limited timeline.
Here's another VG sector link showing huge growth. A big part of that gets sold at gme (on/off line) and don't forget that little publication they run which will grow it's following as more and more people buy consoles/games.