Tue, Sep 2, 2014, 6:17 PM EDT - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Taiwan Semiconductor Manufacturing Company Limited Message Board

auriculatus2004 54 posts  |  Last Activity: Sep 1, 2014 2:33 PM Member since: Jul 20, 2004
SortNewest  |  Oldest  |  Highest Rated Expand all messages
  • Reply to

    The Appeal of Call Options

    by ronharv Aug 31, 2014 5:48 PM
    auriculatus2004 auriculatus2004 Sep 1, 2014 2:33 PM Flag

    that's good to hear you have not been seduced by the dark (long) side of options.....the force is very strong on that side ;)

  • Reply to

    The Appeal of Call Options

    by ronharv Aug 31, 2014 5:48 PM
    auriculatus2004 auriculatus2004 Sep 1, 2014 12:30 PM Flag

    I hope for you that you will realize the fallacy of your approach in less than the 10 years it took me. Imo, the worst thing that can happen to a first time option buyer is that he triples his money in a week......the hook will be so deep that it is almost impossible to remove without excruciating financial pain.....

  • Reply to

    The Appeal of Call Options

    by ronharv Aug 31, 2014 5:48 PM
    auriculatus2004 auriculatus2004 Sep 1, 2014 12:24 PM Flag

    Correct, you are the "capitalist", having the money to buy the additional shares at a lower price, at which you feel comfortable owing more shares.....you are being paid by the gamblers for your patience and the willingness to buy the shares at a lower price. You may have to buy the shares but you may NEVER have to buy the shares. In the meanwhile you take the gamblers money month after month......

  • Reply to

    The Appeal of Call Options

    by ronharv Aug 31, 2014 5:48 PM
    auriculatus2004 auriculatus2004 Sep 1, 2014 12:22 PM Flag

    Like posted before, the seller is the house and the buyer the gambler, or better described by Andre Kostolany, "the option sellers are the capitalist letting the gamblers which buy the options play on their backs!!!"

    Again, the danger the option buyer is exposed to is that he/she has to be correct on two fronts (bets), on the direction of the stock and the time in which the stock will move into that direction. If he is correct on the first, but only off on the second by a single day,...., he will lose 100% of his investment (actually options are not an investment (Andre Kostolany). And to quote the famous late Hungarian investor Andre Kostolany a third time, the money the option buyer pays is better described as "regret money", since the buyer will soon regret having paid that money!

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 31, 2014 7:02 PM Flag

    Yes. Of course there is a potential 260% gain on the call, yet there is also a chance for a 100% loss, something you do not have with the shares (units for LINE). I also agree and know that the option will do good if the stock (yes, units) goes up quickly (with several months left of time premium), yet every month the units/shares get 24 cents taken out, so the units have to gain in priceto "make up" or overcome that "deduction". For all intents and purposes, the $1.65 you are paying is for units valued at 31.72 minus 4.17 (future distributions), which equals $ 27.55 equivalent, meaning you pay $1.65 for a 32 strike while the stock is at 27.55.

    Now, looking at the 27.55, you may start (hopefully) begin to see why the put for 2016, 32 strike is $5.60, since it is effectively 4.45 IN THE MONEY. Hello, listen to the other poster and get a book on options (and I do not mean this to be condescending at all, please believe me). Options are important to fully understand and like norris said, can be used effectively (as in selling them)

    Btw, look at ESV, closed on Friday at 50.48, the three week out September 49 call is 1.45-1.60 (bid-ask). So, no time premium, I guess. Wrong. The stock goes x-D next week by 75 cents. The option trader knows that the stock will get 75 cents deducted and that the share price will get adjusted downward by that amount next week, so effectively for the Sept expiration, ESV is trading at 49.73.......hence the "no premium" situation a few days before x-D....(do you start to see that it effectively does have premium since it is at this point in time only 73 cents in the money)

    Again, I am not saying that you cannot make money being long options, yet I want you to think a bit and see that the super deal on the LINE calls is not cheap. Based on the future distributions you are paying $1.65 for a strike that is $4.45 OUT OF THE MONEY, which is a bunch of premium.

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 31, 2014 3:50 PM Flag

    Yes, statistics show that 80% of all options expire worthless. And of the 20% that do not, probably half expire at an intrinsic value that is less then the average sale price the option was written for. Hence maybe 10% of the cases result in a "loss" for the option writer, and the "loss" is not even a real loss since it only results in a "lost out" on upside. As said, "long is wrong", but I guess everybody has to experience that for themselves.....I had to myself (as much as I hate to admit that).

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 31, 2014 11:55 AM Flag

    I am sorry to be blunt, but you are wrong. I wish you all the best dabbling into buying options. You will make the seller very happy. He is the house and loves when the gamblers pay him!

    I am utterly amazed how you cannot understand that the difference of 5.60 (put) to 1.60 (call) is almost entirely related to the distribution. The remaining "premium" is a function of time remaining and volatility of the underlying stock (same for call and put).

    I of course hope that you will make money on your "cheap" call purchase, as I am long the stock.

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 31, 2014 8:58 AM Flag

    One more thing, look at the 2016 32 put on LINE.......there you can see that the distribution reduction of the share price is taken into account......at 5.60 for an option that is (apparently) only 28 cts in the money!
    So based on the myth of the call having no premium, I guess the put option by the same token now has an exorbitant premium for the same "at the money" strike?
    The call sellers love your approach on the calls. they get an almost guaranteed 20% return with the only downside risk being that the stock loses a lot of value over the time of the commitment (yet if that were to happen, he lessens the blow by the 20% he made on distributions/call premium) , yet the call buyer has the risk of losing 100% of his money!

    Just food for thought.......I remember a famous quote when it comes to options......"long is wrong"!

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 31, 2014 8:37 AM Flag

    Yes, of course as the buyer all you are interested in and care about is the difference between strike and current/future stock price. I am just trying to show you that the seller is not "giving this option away" for next to no premium as is being discussed here, that's all.

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 30, 2014 10:13 PM Flag

    Of course it would be worth $15,......, but the stock would have risen from 31.5 to 40 AND also would have risen 17 x 0.2416 ($4.17). The distribution has "come out" of the stock over that time period, so effectively the stock would have gone from 31.5 to 44.17

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 30, 2014 10:07 PM Flag

    The call premium is not solely based on the underlying stock, sorry. Have a look at ESV for exaple, which is about to go x-D (75 cents). The puts (and calls) do reflect the fact that the stock will "drop" by the dividend before expiration.

    In case of LINE/LNCO, doesn't the stock pps drop by the distribution once a month, too? The person selling the call will get that distribution, the buyer not, yet the buyer has to "hope" that the pps will "make up" the distribution drop. So there are 17 more distributions until the Jan 2016 options expire, so 17 x .2416 will "come out" of the pps. So the option writer will get $ 4.17 (if not called away before expiration) in distributions, ~40 cents in intrinsic and around a buck fifty of call option premium. So, roughly $6 in 17 months, almost 20% at "zero" risk....

    Just saying, since I would hate to see people think that there is "hardly any premium" at all, which is far from it.

  • auriculatus2004 auriculatus2004 Aug 30, 2014 6:05 PM Flag

    And in your mind we will go to .5 times book? I guess that can happen, but in my mind, the fact that relentless short selling has little effect lately is a sign that the bottom is near...

  • Reply to

    It's probably just a hiccup

    by glhunt1 Aug 30, 2014 9:46 AM
    auriculatus2004 auriculatus2004 Aug 30, 2014 3:42 PM Flag

    Maybe it is a severe case of the hiccups!!! I take that hiccup for a few more sessions.....

    A famous person once said that the differece in stockprice between current price and bankruptcy is a lot less than between the current price and a fixed business.......

    Just look at Ford, in the depths of the great recession it was $2. The difference between that time and bankruptcy was $2, but $15 between that time and a fixed situation..... a gamble on the survival of F (w/o going through bk) was worth a 750% gain vs a 100% loss.......

    Have no idea what will happen here, but I have my 50k shares at an avg of 6 cents......maybe I will lose the beer money, but if I do not lose it, and things turn the corner, it will turn into a bar of gold. Only these two outcomes are in the future......imo. Again, not saying anybody should buy, yet I do not understand who would sell at these near zero prices.....

  • auriculatus2004 auriculatus2004 Aug 30, 2014 3:34 PM Flag

    short interest does not effect stock price movements? Which truck did you just fall off of? What if Shell were to get the Arctic concession and now that SDRL is finally stopping to orer new rigs, what if the earnings forecast were to stabilize? Almost 20% short interest would double the pps in an explosive way, imo.

    The pps was 39 when 38 million shares were short. It is still right at that level with 69 million shares short. Who bought these 30 million shares while the pps did not drop. The shares have been squirreled away by big institution that have time and will gladly sell them again at $70 to a fanatic crowd....like it has happened a thousand times before. when stocks fail to drop on bad news, one must start to buy, imo.

  • Reply to

    Back to $50?

    by howlow3 Aug 18, 2014 5:22 PM
    auriculatus2004 auriculatus2004 Aug 30, 2014 2:33 PM Flag

    Yes, we have broken through and the 42.60 should now become support. We will see. Only problem is that the forward p/e is near the high end of the past few years range....still holding entire position. Demographics are in favor, and after the next dividend, it will be time again for them to raise it for 2015....

  • Reply to

    Options (again)

    by ronharv Aug 29, 2014 5:15 PM
    auriculatus2004 auriculatus2004 Aug 30, 2014 2:28 PM Flag

    You are aware that the premiums are not low, since you need to subtract the total sum of the distribution until expiration from the current share price.....just think of what kind of total return the seller of that call will have if he delivers the shares after taking distribution, a small intrinsic gain and the option premium in a little over a year....

  • auriculatus2004 auriculatus2004 Aug 30, 2014 2:24 PM Flag

    And when additional huge short sales in a (any) stock fail to drive the pps lower,....., oh well, don't worry, you will find that out sometime in the future. Until then, keep thinking of the two words I had for you.....you do remember, right?

  • Reply to

    Another 10% increase in shorts in two weeks

    by auriculatus2004 Aug 27, 2014 7:45 AM
    auriculatus2004 auriculatus2004 Aug 27, 2014 8:01 AM Flag

    19% of outstanding shares short.

  • Amazing, almost 69 million shares short.....from 7/31 to 8/15.....wow.

  • Reply to

    Same idiots that downgraded Wyndham at 50

    by mysportcraft Aug 4, 2014 11:52 AM
    auriculatus2004 auriculatus2004 Aug 26, 2014 5:20 PM Flag

    They were even better contrarian indicators when they were together with "Alex Brown". Had to think the same thing though... :)

TSM
21.08+0.14(+0.67%)Sep 2 4:02 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.