Message Font: Serif | Sans-Serif
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14293  
Subject: Re: HPQ 2015 Calls Date: 11/23/2012 4:21 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I went for 2014s.
The fat lady is likely to do most of her singing in the next year.
If the firm looks good they can be rolled, if not I'll have had less skin in the game.
The $13s closed at $1.60 yesterday.
Up 8% from the $1.48 I paid. Whee! Still likely to expire worthless.

This probably makes no sense as a meaningful portfolio allocation unless
you have some special insight into one or more of their businesses.
Maybe like getting odds on the roll of a die:
If it comes up 1,2,3, or 4 you lose everything you bet.
If it comes up 5 you get 3x your money and if it comes up 6 you get 6x your money.
That's a game worth playing, but you'd want to play it with very small bets.

Incidentally, here's a nice strategy if the stock is rising and things
are looking rosy and you want to stay with the position.
As the price rises up to/through the strike price, sell the calls while
their time value is maximized and switch to lower strike ones which have
much lower time value. This will reduce your breakeven substantially.
e.g., I bought BAC $10 calls when the price was low.
It looks like it will rise up to/through $10 soon at which point I'll
sell the $10s and switch to a lower strike or just plain stock.
I think they "should" be trading at $16+ on a cyclically adjusted basis.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.