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Post by epc1355 on Jan 1, 2018 20:33:18 GMT -5
I know I've seen some recs on this page before, but I can't seem to find those threads. I'm interested in learning more about trading options. Since I strongly believe in the potential of afrezza, what better time to get my feet wet with some call options in MNKD! Although I've read a lot over the past couple years, I have no experience in options. I would love to benefit from the wisdom of some the more experienced fellow longs on this board (basically directing this at you sports . What are some examples of the more recent call options you all bought? Planning on buying? I own a lot of the stock, and I would like to reduce my risk a little by selling some shares, and replacing them with call options. Any advice appreciated!!!...except advice about how risky it is, and how I shouldn't do it because I'm inexperienced. I understand the risk, but you have to learn somehow. Thanks!
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Post by sportsrancho on Jan 1, 2018 21:02:16 GMT -5
I know I've seen some recs on this page before, but I can't seem to find those threads. I'm interested in learning more about trading options. Since I strongly believe in the potential of afrezza, what better time to get my feet wet with some call options in MNKD! Although I've read a lot over the past couple years, I have no experience in options. I would love to benefit from the wisdom of some the more experienced fellow longs on this board (basically directing this at you sports . What are some examples of the more recent call options you all bought? Planning on buying? I own a lot of the stock, and I would like to reduce my risk a little by selling some shares, and replacing them with call options. Any advice appreciated!!!...except advice about how risky it is, and how I shouldn't do it because I'm inexperienced. I understand the risk, but you have to learn somehow. Thanks! I think it’s very smart on your part to do it. My opinion only of course:-) I have shares of MNKD in my Roth, but I basically only trade options. I do the same thing over and over because it works for me. I buy Leaps ( a year or longer ) and right out of the money strikes. Usually I sell them after I’ve held them a year because of taxes, but sometimes in the case of like WYNN I keep rolling them over. All that’s means is that I take my profits wait for the stock to dip and buy the options again at a higher strike. ( 2019’s in this case ) it would be a lot less expensive if I bought short term options but I’m kind of a chicken:-) I’ve got options in Twitter, KBH, WYNN, MGM, C, LL, WDC, FCX. And MNKD. I’ve got 500 leaps options on MNKD for 2019. And only about 30 for 2020. My 2019’s are already in the money because they’re two dollars strikes that I got when the stock was around a dollar. I’ll be buying 2019’s on EXAS tomorrow. Right out of the money. I start with a small position. And if the stock goes where I think it will I add to it. United rentals is another one I may enter. In the case of FCX. I had bought options a couple months ago but they went the other way on me, so I sold them right away and took a loss. Now I’m back in again and the stock has broken out:-)) Baba and mnholdem are really good at calculating the least expensive options, sometimes buying in the money is better. Or further out of the money where there is more open interest. Like I said I’m kind of a one trick pony:-) GL PS...I also have MNKD options that will probably expire worthless January 18. Because of the reverse split:-( Win some you lose some. But there are also times in life when you have a great opportunity!
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Post by broncolife on Jan 1, 2018 22:11:46 GMT -5
Sports,is pretty much dead on. I would by Leaps which means a year or longer before expiration. Try to buy in the money or as close to in the money as possible. A little bit more expensive but in my opinion it's the better way to go. And with $MNKD 2019-2020 is probably a good bet.
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Post by mytakeonit on Jan 2, 2018 0:42:32 GMT -5
I know I've seen some recs on this page before, but I can't seem to find those threads. I'm interested in learning more about trading options. Since I strongly believe in the potential of afrezza, what better time to get my feet wet with some call options in MNKD! Although I've read a lot over the past couple years, I have no experience in options. I would love to benefit from the wisdom of some the more experienced fellow longs on this board (basically directing this at you sports . What are some examples of the more recent call options you all bought? Planning on buying? I own a lot of the stock, and I would like to reduce my risk a little by selling some shares, and replacing them with call options. Any advice appreciated!!!...except advice about how risky it is, and how I shouldn't do it because I'm inexperienced. I understand the risk, but you have to learn somehow. Thanks! ?? Why is selling some shares and replacing them with call options less risky? I consider options to be risky, but minimal if you know what you're doing. Newbies see people making $$$, but jump in without knowing or having the knowledge to handle it. I also use to day trade a lot ... unless you have the time to be watching the board constantly, you are in the wrong track. Study options first ... before you put any cash into it. If you think you can handle it ... then, jump in. As I've always said ... the fastest way to learn something is through PAIN!
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Post by babaoriley on Jan 2, 2018 1:35:23 GMT -5
epc,
For the basics, read a book called Covered Calls and Naked Puts by Ronald Groenke - that's a fairly short book. Very simple and will give you some understanding, which you need. As far as what's less risky, that's not an easy question to answer. You will likely find that you can control the same amount of stock for a lot less money when you buy calls, so if we go to zero, you'll lose less. On the other hand, your control is only for so long, and once that time period is up, depending on what the share price is at that time compared to what strike price you bought (strike price is the price you have the right to buy the stock at), you could have nothing also, and if you had bought the stock, you'd still have a shot at a comeback.
The funny thing about leaps - or long term options - is that when you buy them you think you have plenty of time, and generally, it turns out you don't have enough. It's all very seductive, so watch out.
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Post by mytakeonit on Jan 2, 2018 3:44:26 GMT -5
Oh no! A lot of people use to tell me to take a leap. I thought they were harassing me and telling me to take a "flying leap".
Later I found out that they were just trying to help and advise me. I kept my shares and still trading. I don't know where those advisors are ... hopefully, rich and retired.
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Post by sportsrancho on Jan 2, 2018 6:16:40 GMT -5
“Why is selling shares and replacing them with call options less risky.”
Simply because you can control the same amount of shares, for let’s say, a fourth of the money:-) One option call lets you control 100 shares. If you do want to go for broke and buy call options with the whole amount, it gives you 3 or 4 times the leverage depending.
With KBH I actually did not buy leaps. (My options expire in late March). The homebuilder trade is right after Thanksgiving to March. In anticipation for the spring home buying season. So it’s kind of buy the rumor sell the news. I do footwork. I go out to the homebuilding sites, I ask questions. I know all my stocks very well and tend to just trade in and out of the same ones.
You can almost always sell the option if you are down. If the market dips, your company gets involved with a lawsuit... just like shares you want to always have a stop loss in your mind.
I’ve very rarely ever buy and hold. I buy WYNN when the economy is doing well and sell it at the first sign of recession. I’ve ridden it up to $200 a share probably three times now. I know when it tops out because I’m so familiar with it. *If a stock, or the S&P goes down through it’s 200 day moving average on high-volume I’m out. Its not healthy, it’s a sick stock or market. I’ll get back in when it crosses back up over it. It’s very easy to stay on the safe side if you’re not emotionally involved and you are disciplined. Hope is not a option! Ha:-) Except with MNKD....
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Post by Deleted on Jan 2, 2018 8:21:40 GMT -5
@sportsrancho "I’ve got 500 leaps options on MNKD for 2019. And only about 30 for 2020. My 2019’s are already in the money because they’re two dollars strikes that I got when the stock was around a dollar."
I am assuming you had these options during the spike above $6. Did you sell any during this period?
A friend also possessed hundreds of 2018 $5 calls; despite my urging to sell, he refused. He know kicks himself everytime I see him.
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Post by matt on Jan 2, 2018 9:18:37 GMT -5
Why is selling some shares and replacing them with call options less risky? The reason an option might be less risky is because it has an asymmetrical payoff matrix. For example, if you buy an option for 20 cents on a stock trading at $3 and the price moves to $3.50 you make 30 cents in profit and in the meantime you can put the rest of your money to work elsewhere. However, if you buy the stock for $3 your full investment is locked up, but you make the full 50 cents profit on the position because you didn't pay for the option. However, if the stock tanks and sells for $2 the call option investor is out the 20 option price versus the shareholder who is out a full $1. Note that few serious option players hold naked options; they use options as part of a portfolio strategy to eliminate certain types of risk. Continuing the previous example, if you thought a stock was going to the moon and wanted all the gain, but were still concerned that bad news would send it south, you could buy the stock for $3 and also buy a put option, lets say at a strike price of $2.80. If the stock goes up, you make the profit you wanted, but if the stock goes down you have protected your downside since you can recover $2.80 of your investment regardless of how low the stock goes. Other people play biotechs and other firms with expected binary events by not holding the stock at all, but buying calls and puts. Those investors lose money if the price doesn't move, but make a profit on either the call or the put if the stock moves out of the range they have estimated. Finally, realize that options are priced relative to the perceived market risk of the underlying security. Black-Scholes and other option pricing models are essentially variants of an arbitrage pricing model and therefore the pricing is strong-form efficient, meaning that you will pay a fair price for any risk protection. There is no such thing as a free lunch in the public financial markets unless you have superior information. The classic text book on options was written by Cox and Rubenstein. It is highly recommended if you have taken several university level finance courses and are comfortable with mathematics. If not, there are better alternatives.
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Post by sportsrancho on Jan 2, 2018 9:43:12 GMT -5
@sportsrancho "I’ve got 500 leaps options on MNKD for 2019. And only about 30 for 2020. My 2019’s are already in the money because they’re two dollars strikes that I got when the stock was around a dollar." I am assuming you had these options during the spike above $6. Did you sell any during this period? A friend also possessed hundreds of 2018 $5 calls; despite my urging to sell, he refused. He know kicks himself everytime I see him. No they are 2019’s. I won’t be selling those until late next year. Otherwise I would’ve been paying way over $60,000 in taxes. This is CA ya know. Actually that puts me in 33% percent tax bracket. So make that $90,000. As opposed to 15% after a year.
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Post by epc1355 on Jan 2, 2018 10:59:52 GMT -5
Thank you all for the feedback! Especially sports, baba and Matt. I will check out that book Baba. Matt, your rec may be over my head? I definitely don't have any university level finance education. I'm a chemical engineer and dermatologist, so I consider myself to be relatively intelligent and good at mathematics....but I'm starting to feel a little over my head! I bought a ton of it when it was under a $1. I sold a bunch when it was in the $4 range, but still own a little over 200k shares, and it has ballooned to account for a pretty large % of my portfolio. I still strongly believe in the potential, so I'm hesitant to sell much more right now (especially as I like it at this price). I'm trying to figure out a way to stay heavily invested, but limit the downside risk. Sounds like there is some debate on if call options are the right approach to accomplish that. Maybe some puts instead? Or some $1 strikes for 2019, so I can still benefit on the upside, but can buy my shares back cheaper if they drop? Sorry, I know my options lingo is showing how little I really know about them! but I agree with you mytakeonit....the fastest way for me to learn is to just put a little money on the line! I will emphasize the 'little' part I realize its probably time to just hire some professional help, but I would still like to understand it a little better before that. Plus I really enjoy it! Maybe I should call up Aegis?? Kidding of course!! Sports, did you end up buying 2019 leaps today? Do you mind telling me what strike price and premium?
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Post by kc on Jan 2, 2018 11:46:45 GMT -5
I know I've seen some recs on this page before, but I can't seem to find those threads. I'm interested in learning more about trading options. Since I strongly believe in the potential of afrezza, what better time to get my feet wet with some call options in MNKD! Although I've read a lot over the past couple years, I have no experience in options. I would love to benefit from the wisdom of some the more experienced fellow longs on this board (basically directing this at you sports . What are some examples of the more recent call options you all bought? Planning on buying? I own a lot of the stock, and I would like to reduce my risk a little by selling some shares, and replacing them with call options. Any advice appreciated!!!...except advice about how risky it is, and how I shouldn't do it because I'm inexperienced. I understand the risk, but you have to learn somehow. Thanks! ?? Why is selling some shares and replacing them with call options less risky? I consider options to be risky, but minimal if you know what you're doing. Newbies see people making $$$, but jump in without knowing or having the knowledge to handle it. I also use to day trade a lot ... unless you have the time to be watching the board constantly, you are in the wrong track. Study options first ... before you put any cash into it. If you think you can handle it ... then, jump in. As I've always said ... the fastest way to learn something is through PAIN! I have always been a buy and hold guy! Have never taken the time to figure out options. I know that Sports would teach me but I have to take the time to learn. I guess that I'm an old dog.....
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Post by sportsrancho on Jan 2, 2018 13:06:13 GMT -5
Thank you all for the feedback! Especially sports, baba and Matt. I will check out that book Baba. Matt, your rec may be over my head? I definitely don't have any university level finance education. I'm a chemical engineer and dermatologist, so I consider myself to be relatively intelligent and good at mathematics....but I'm starting to feel a little over my head! I bought a ton of it when it was under a $1. I sold a bunch when it was in the $4 range, but still own a little over 200k shares, and it has ballooned to account for a pretty large % of my portfolio. I still strongly believe in the potential, so I'm hesitant to sell much more right now (especially as I like it at this price). I'm trying to figure out a way to stay heavily invested, but limit the downside risk. Sounds like there is some debate on if call options are the right approach to accomplish that. Maybe some puts instead? Or some $1 strikes for 2019, so I can still benefit on the upside, but can buy my shares back cheaper if they drop? Sorry, I know my options lingo is showing how little I really know about them! but I agree with you mytakeonit....the fastest way for me to learn is to just put a little money on the line! I will emphasize the 'little' part I realize its probably time to just hire some professional help, but I would still like to understand it a little better before that. Plus I really enjoy it! Maybe I should call up Aegis?? Kidding of course!! Sports, did you end up buying 2019 leaps today? Do you mind telling me what strike price and premium? I really don’t get a chance to trade before 9 AM because I’m at the gym. No I did not buy any options. I was going to buy some EXAS but it keeps going down so will wait. These MNKD options right now are overpriced because the stock is so volatile. If you wait till the stock slows down and is consolidating the options should become cheaper. Because no one is betting that it runs one where the other. Then buy 2020’s 3 or 5 strike. If we keep running up and I can get out of my 2018 calls then I will take that money and buy 2020 5 or 7 strike.
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Post by sportsrancho on Jan 2, 2018 13:20:59 GMT -5
The best thing to do is just buy one or two calls. And watch what happens. For me that just made it all become clear. I have to say I very rarely take profits unless I double or triple my money. And I don’t buy calls on a stock unless I think that will happen. But I give myself a long time frame. I have a friend in Arizona who buys mankind weekly and monthly calls over and over again just to gamble. Loses his shirt every time! I keep telling him to buy leaps....he keeps telling me he’ll be dead by then. Lol I suppose someday he’ll hit it big. It might even be today:-))
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Post by babaoriley on Jan 2, 2018 13:28:46 GMT -5
Thank you all for the feedback! Especially sports, baba and Matt. I will check out that book Baba. Matt, your rec may be over my head? I definitely don't have any university level finance education. I'm a chemical engineer and dermatologist, so I consider myself to be relatively intelligent and good at mathematics....but I'm starting to feel a little over my head! I bought a ton of it when it was under a $1. I sold a bunch when it was in the $4 range, but still own a little over 200k shares, and it has ballooned to account for a pretty large % of my portfolio. I still strongly believe in the potential, so I'm hesitant to sell much more right now (especially as I like it at this price). I'm trying to figure out a way to stay heavily invested, but limit the downside risk. Sounds like there is some debate on if call options are the right approach to accomplish that. Maybe some puts instead? Or some $1 strikes for 2019, so I can still benefit on the upside, but can buy my shares back cheaper if they drop? Sorry, I know my options lingo is showing how little I really know about them! but I agree with you mytakeonit....the fastest way for me to learn is to just put a little money on the line! I will emphasize the 'little' part I realize its probably time to just hire some professional help, but I would still like to understand it a little better before that. Plus I really enjoy it! Maybe I should call up Aegis?? Kidding of course!! Sports, did you end up buying 2019 leaps today? Do you mind telling me what strike price and premium? epc, sounds like you have played this well, consider not changing much at all! Sports can get you all excited over options, but watch out, especially short term options. But you might want to someday find the world of selling naked puts. But that day is not now, for the most part. The time for that is after a big correction or toward the end of a bear market. It's like stealing at that point.
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