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Ebix Inc. Message Board

srikantmarakani 32 posts  |  Last Activity: 3 hours ago Member since: Jan 12, 2001
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  • Reply to

    Jan 17 10 strike calls going for only 1.65!

    by srikantmarakani Jul 22, 2015 12:31 PM
    srikantmarakani srikantmarakani 3 hours ago Flag

    Of course, the premium on the sold put includes (or should include) the dividend and the desirability of the premium received must be analyzed with that perspective.

    Many positions of mine are short puts or long calls as they help turn dividends into capital gains (the put premium being a capital gain) and my tax rate on American dividends is 30% while I have no capital gains. I mostly hold shares only if the options are illiquid/non-existent or if the dividend withholding tax for the country of the security is very low or zero.

    Sentiment: Buy

  • Reply to

    Jan 17 10 strike calls going for only 1.65!

    by srikantmarakani Jul 22, 2015 12:31 PM
    srikantmarakani srikantmarakani 3 hours ago Flag

    The call already accounts for that. For eg., the 10 strike call I bought earlier is not even down all that much (the last price is 1.45 and the bid is 1.2 and I bought at 1.65) even though the price has dropped much more than the 0.55 dividend today (the unit price was about 11.3 when I bought it). In other words, the slippage is really slight and you make up for it with nearly free leverage until the next dividend date.

    An extra bonus is that if the price rises quickly, you can just exercise the call and get the dividend and my broker does this automatically if it is beneficial to do so. You only lose if there are no bounces at all for a long time but even there the chances are good that you do well when compared to just buying the units.

    (In short, long dated American calls on high dividend paying stocks have some very neat properties which make them great trading vehicles.)

    Sentiment: Buy

  • Reply to

    Jan 17 10 strike calls going for only 1.65!

    by srikantmarakani Jul 22, 2015 12:31 PM
    srikantmarakani srikantmarakani 3 hours ago Flag

    Of course, I understand that the LEAPs don't get the dividends. I am playing for a bounce and there is a long time for that bounce to play out. I only lose each dividend if the price doesn't bounce before that time given the very small time value (this generally makes ITM LEAPs a great way to play the volatility of high dividend stocks or lose less if the dividend is cut and I have used it with pretty good results several times).

    I don't need to understand the price action to buy - I am not thinking short term so value is much more important. If the market gets crazy and MEMP is at $1 tomorrow with no new information I take that as a buy signal even if I don't understand why it is at $1. :)

    Sentiment: Buy

  • Reply to

    Jan 17 10 strike calls going for only 1.65!

    by srikantmarakani Jul 22, 2015 12:31 PM
    srikantmarakani srikantmarakani 4 hours ago Flag

    Rolled down my strike to 7.5 buy buying a bull spread (sell 10 strike call and buy 7.5 strike call) to shave 1.35 off my break even so that it is now 10.3 but with 1.15 more skin in the game (I could have probably got it for less if I had waited a bit more). The price action is super scary and I don't understand it but logic tells me that this price is very low. Well, we shall see. At least I have only 2.8 skin in the game for these options so my loss is limited.

    Sentiment: Buy

  • Reply to

    Big jump in short interest....

    by n16m15 Jul 28, 2015 9:36 AM
    srikantmarakani srikantmarakani Jul 28, 2015 12:28 PM Flag

    The cost was between 2.5 and 3 I think. I sold a couple of 45 puts for the relatively cheap price (for CBI!) of 2.65 last week before earnings and it later went up to 3. So that is something like 10-12 million dollars in these puts. Insane stuff given who the major shareholders of CBI are.

    Sentiment: Buy

  • Reply to

    Big jump in short interest....

    by n16m15 Jul 28, 2015 9:36 AM
    srikantmarakani srikantmarakani Jul 28, 2015 10:24 AM Flag

    I think there might be quite a few left since volume was low. I wonder who sold at under 47 given the great quarter and conference call.

    Sentiment: Buy

  • Reply to

    Big jump in short interest....

    by n16m15 Jul 28, 2015 9:36 AM
    srikantmarakani srikantmarakani Jul 28, 2015 10:06 AM Flag

    An amazing number of puts for Aug 21 too, especially at 45 (about 3.8 million shares worth). There were quite a few puts open for July too if I remember correctly. Anybody long those puts in July got killed and it looks like August will not be that great as well given how expensive the puts are but we will have to wait and see. I still don't understand the thinking behind the shorts' actions. They got their victory on the collapse to 32 - why continue to play when the odds look against them?

    Sentiment: Buy

  • Reply to

    Shorts not scared

    by daytimetv06 Jul 24, 2015 10:22 AM
    srikantmarakani srikantmarakani Jul 24, 2015 1:06 PM Flag

    I do the monthlies (i.e. the ones expiring in the 3rd week of every month). I am currently shorting the 50 strike puts. I wait until the expiry date and if it looks like the put will be assigned, I put in a spread trade in IB to buy back the put and short the same strike put for the next month (otherwise, I let it expire and just short the next month's put directly). I find that putting in an aggressive bid and then slowly increasing it is needed as the bid/ask spread is way too wide to be useful. If the stock moves a lot, I sometimes change the strike. Recently, I have been able to sell the last 3 months puts for 1.7, 1.4 and 2.75 premium (the last one being a spread). Accounting for commissions, this gives a premium of roughly 5.8 per share if CBI ends up more than 50 on Aug 21. Unless CBI is over 55, I will continue writing the put in future months (stopping when CBI gets over 55). I don't think I can get 5.8 every 3 months because that would be insane, but even an average of 3 every 3 months or a dollar a month for an investment of 50 is quite good. The key is to use a safe stock with good premiums and these are quite rare. I have been lured into stocks with good premiums before and have lost badly before so I look into safety first. CBI seems to be an ideal stock for this (EBIX and QCOR were previous ones which did very well, the latter made me something like 60% p.a. for a couple of years).

    Caveat : You can lose a lot quickly with a wrong stock (OCN for me) which has a quick and permanent decline in business. Price volatility, on the other hand, is no issue if one is disciplined enough to ride it out. High price volatility with a stable business like CBI is a godsend.

    Sentiment: Buy

  • Reply to

    Shorts not scared

    by daytimetv06 Jul 24, 2015 10:22 AM
    srikantmarakani srikantmarakani Jul 24, 2015 11:40 AM Flag

    Same here - have been rolling them for a while now. The premiums are quite amazing. (Also own a bunch of 35 strike Jan 17 calls - the premium is also high but still much lesser than selling the puts gives me on a monthly basis.)

    Sentiment: Buy

  • Reply to

    Listened to the whole call

    by momentum_play Jul 24, 2015 1:25 AM
    srikantmarakani srikantmarakani Jul 24, 2015 9:46 AM Flag

    Glad to be wrong for once. :) Wouldn't still be surprised with some short attack later though.

  • Reply to

    Listened to the whole call

    by momentum_play Jul 24, 2015 1:25 AM
    srikantmarakani srikantmarakani Jul 24, 2015 7:08 AM Flag

    I think that there is a chance it will be looking at the last two stocktwits posts. It looks like the technical brigade has been sent to short CBI. I don't think they can keep it down for long though given how the underlying business is doing. Too bad they can't do more share repurchases right now due to the debt covenant.

    Sentiment: Buy

  • Reply to

    Trading down??

    by srikantmarakani Jul 23, 2015 4:17 PM
    srikantmarakani srikantmarakani Jul 23, 2015 11:32 PM Flag

    Amazon issued 8 million shares over the last 12 months which should have netted them 3.2 billion. And their entire historical profit is a small fraction of that.

    Maybe CBI should seriously invest in hyping their stock and creating visions of vast profits infinitely far into the future. Sure beats actually making real profits.

    Sentiment: Buy

  • Reply to

    Dividend announcement

    by atb.racer Jul 23, 2015 7:08 AM
    srikantmarakani srikantmarakani Jul 23, 2015 6:12 PM Flag

    Came out today.

    Sentiment: Buy

  • Okay, the businesses are different but isn't this just a bit crazy?

    Sentiment: Buy

  • srikantmarakani by srikantmarakani Jul 23, 2015 4:17 PM Flag

    Earnings beat, positive cash flow, revenue miss but largely due to strong dollar. What will it take for it to go up?

    Sentiment: Buy

  • srikantmarakani srikantmarakani Jul 23, 2015 4:07 PM Flag

    Earnings are better than $165 million but let us see the stock reaction. It is a crazy stock but I hope it will be good.

    Sentiment: Buy

  • Reply to

    Jan 17 10 strike calls going for only 1.65!

    by srikantmarakani Jul 22, 2015 12:31 PM
    srikantmarakani srikantmarakani Jul 22, 2015 10:36 PM Flag

    I did buy a few between 1.6 and 1.65 before I posted but the MMs may have seen the demand and upped the price at which they were willing to let go. Also got a few Jan 16 12.5 calls for 0.6 before I noticed the much better deal on Jan 17 10 calls.

  • Reply to

    MEMP getting slaughtered

    by srikantmarakani Jul 22, 2015 2:38 PM
    srikantmarakani srikantmarakani Jul 22, 2015 3:17 PM Flag

    The post seems to have been cut off at the bracket for some reason. I had just written a few sentences about how rapid turnarounds have been when sentiment shifted - INTC, AAPL, Berkshire - but that it could be a long while before it happened.

    Sentiment: Buy

  • Reply to

    MEMP getting slaughtered

    by srikantmarakani Jul 22, 2015 2:38 PM
    srikantmarakani srikantmarakani Jul 22, 2015 3:07 PM Flag

    I hope and think it will be. Shipping was recently being slaughtered but the BDI has shot up and my NM stock has shot up nicely in the last week finally putting me in the green on it. The bounce has been as fast as the decline which would have been bone-crunching except for the fact that my shipping exposure is small (

    Sentiment: Buy

  • srikantmarakani by srikantmarakani Jul 22, 2015 2:38 PM Flag

    Own a bunch of it too today and always viewed it as a conservative MLP (i.e. investment rather than speculation). It looks attractive at the current price and Jan 17 10 strike LEAPs look positively cheap at around 1.65. I bought several of these as I didn't want to add much more capital to my already severely hit MLP part of my portfolio but still wanted to capture the upside. One doesn't get the dividend this way but the premium of 40 to 45 cents for 1.5 years seems insanely cheap.

    Further, if one is convinced that MEMP will recover soon, this is a nice way to benefit from a bounce without taking on much risk if an immediate bounce does not materialize.

    Take everything with a pinch of salt when it comes from me. I earlier thought that 15 was a pretty good price for MEMP.

    Sentiment: Buy

EBIX
31.78+0.79(+2.55%)Aug 3 4:00 PMEDT