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Genworth Financial, Inc. Message Board

  • ancohold ancohold Jul 31, 2010 9:31 AM Flag

    HI JIM !!

    i bought PMI at 3.69 before the earnings.As all the PMI's the forecast is not so good. Please advice me how should i protect my 1000 shares ? last trade on friday 3.10 thx

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    • rob

      i am trying to figure out the logic of your having bought back the aug $14 calls you had sold for $2 for $1.47 ???

      that was your most defensive position. paying $1.47 meant you expected gnw to drop MORE than $12.53 on the expiry date in aug 3 weeks from now. $14 minus $1.47

      that position should have been left alone as the original play had those shares protected down to about $13.20 with a $.80 gain if taken at $14

      IF gnw was not above $14 on the aug expiry they would have expired worthless and the subsequent replacement option sale for sept would drop the net share cost at least another $.70 to $12.50 per share

      if you average just $.50 per month on a gnw cc strategy thats $6.00 per year in net share cost reduction..$12 over a 24 month timeline

      thats why people like kp, broke and myself have a very low net cost basis on our gnw holdings


    • Rob,

      Yeah. Nothing like bottom fishing! Good stuff.


    • jim- don't know if you read my last post, this thread. however i will take the $8875 earned friday, and the $2500 earned from 1st cc sell/buy (that i forgot about) and purchase additional shares.
      so w/ the $10375 think i can get about 750 shares which takes me from 9500 shares to 10,250. a good thing :)

    • jim- aug14 25cc sold@1.96 buy@1.47 net 1.47/3675
      15 35cc sold@1.26 buy@0.21 net 1.05/3675
      16 35cc sold@0.69 buy@0.08 net 0.61/1525
      stock price@sold $15.56(close) -@buy $13.58(close)
      avg. p/sh. paid $15.15

    • I bought 1000 shares pmi @$4.50,I am still holding,don't panic,be patient,it will go back over $6.if s&p is 1200 ,pmi will be betwee $5 - $6.

    • It doesn't work like that here. Have you ever seen Jim praise a winner like Champ or elrambu? Never! Knowledge is envy, for Jim and his aliases. Every must follow Jim on here, and sell cc. Otherwise they are either nutcases or GAMBLERS. lol

    • anch- knowledge is power, a little of each goes a long way. GL

    • sorry dear friend , i could not answer your post immediately. 100% i am going to try to read the book that you recommended. Jim is right, time might not be on my side but i will try to read as much as i can. thank you for your suggestion. i do have some basic knowledge , but one thing is for sure:DAY TRADING IS NOT FOR ME., i think swing trading will fit me very well.Jim's idea to buy and sell options for a monthly cash flow is a good one, but i have to be very careful,because options are a highly leveraged proposition. one needs to have a good training to go about that way.THX,MIKE

    • Thanks Jim,

      I bought Sept.14 call at the same time, I'm thinking of buying the put back when the prize moves up. Does the prize of put increases or decreases with the stock price? Thanks a lot Jim, I wish you a nice weekend.


    • rob

      the aug $15 and aug $16 you rebought for a huge closing profit was not a big expense.

      however one rule you should always do on any buyback is to at least sell enough new replacement calls on that same day to at least equal the cash you just spent.

      doing so keeps your net share cost the SAME.

      by not selling any replacement calls you increase the net share cost by the amount you spent on the buyback.

      friday norning when gnw was around $14, you could have close 30 aug $16 sold calls for about $.10 or $300 and sold 30 sep $14 calls for $1.00 or $3000.

      that would have reduced the net share cost of those shares by another $.90 in addition to taking the $.50 or so closing trade profit you did.

      never keep an existing sold cover call in place that has a month to go and is trading for less than $.15...thats all the downside protection leaving it in place offers.


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