How Buffett is Playing the Market - Page 2

DanS. · 02-24-2008, 04:39 PM

lol...oh...I wasn't talking to you specifically slowhand....just to people in general...

kblair7 · 02-24-2008, 06:02 PM

Quote:

Originally Posted by Richterscale

I would only buy into manufacturing stocks, if I was betting on a collapse in the value of the dollar such that it made it cheaper to make goods here again, than to import them. But I'm no expert.

No not really. The dollar might be weak but it is far from collapse. For a currency to fail it requires a bit more than a minor blip or downturn.

slowhand · 02-24-2008, 09:01 PM

Quote:

Originally Posted by DRS112

Never heard of it...sounds pretty conservative...so unless you've got 10 years or less to live I wouldn't bank on it too heavily...

I was curious about it..I dont know much about the market..I have a few shares of stock that I inherited from my parents, and were doing good untill the housing crash, and have been thinking to either take the money and run, or play the market a bit.....And lose some more money

Noob920 · 02-25-2008, 07:07 AM

Essentially, its a strategy on covered-call writing. You can write calls (sell call options) on a stock you hold and bring in revenue. Unless the stock is called away (you are forced to sell it at the strike price of the option) you can continue to earn revenue by selling more call options once the others have expired.

slowhand · 02-25-2008, 08:44 AM

Quote:

Originally Posted by Noob920

Essentially, its a strategy on covered-call writing. You can write calls (sell call options) on a stock you hold and bring in revenue. Unless the stock is called away (you are forced to sell it at the strike price of the option) you can continue to earn revenue by selling more call options once the others have expired.

Yes, I pretty much understand that part of it..What I dont understand is, lets say the stock goes down, and more than likely you wont get called out...Then lets say the stock continues to drop..There is a stategy for that, but I dont quite understand it

My friend got into this a few months ago, and hes been doing well so a far, but hes also done alot of research as well

Noob920 · 02-25-2008, 08:57 AM

Quote:

Originally Posted by slowhand

Yes, I pretty much understand that part of it..What I dont understand is, lets say the stock goes down, and more than likely you wont get called out...Then lets say the stock continues to drop..There is a stategy for that, but I dont quite understand it

My friend got into this a few months ago, and hes been doing well so a far, but hes also done alot of research as well

As you sell calls, your overall cost basis on the stock decreases. For instance, you buy 100 IBM at 100, you sell one call (each call contract is for 100 shares) at 3 - your cost basis on IBM is now 97. say the option expires because the stock fell back. You do it again - your cost basis drops further. CONCEIVABLY, you can do this forever - IF the stock isn't called away. Do it long enough, whatever price you sell your stock at, you are in profits.

My advice to you is to HOLD ON to your stock. The market is currently undergoing a correction - it WILL rebound.

slowhand · 02-25-2008, 09:33 AM

Quote:

Originally Posted by Noob920

As you sell calls, your overall cost basis on the stock decreases. For instance, you buy 100 IBM at 100, you sell one call (each call contract is for 100 shares) at 3 - your cost basis on IBM is now 97. say the option expires because the stock fell back. You do it again - your cost basis drops further. CONCEIVABLY, you can do this forever - IF the stock isn't called away. Do it long enough, whatever price you sell your stock at, you are in profits.

My advice to you is to HOLD ON to your stock. The market is currently undergoing a correction - it WILL rebound.

Ok..That makes sense..If the stock keeps falling, youre not going to get called out, so you continue to make money on it

Noob920 · 02-25-2008, 09:45 AM

Quote:

Originally Posted by slowhand

Ok..That makes sense..If the stock keeps falling, youre not going to get called out, so you continue to make money on it

BTW - I made a few dollars on Ambac in January - bought 1000 sh at $5 sold it a few days later at $15....

Normally, I'm a buy and hold guy, but this was a play I couldn't resist.

slowhand · 02-25-2008, 12:32 PM

Quote:

Originally Posted by Noob920

BTW - I made a few dollars on Ambac in January - bought 1000 sh at $5 sold it a few days later at $15....

Normally, I'm a buy and hold guy, but this was a play I couldn't resist.

Thats a sweet deal..The best kind

Noob920 · 02-25-2008, 12:46 PM

Quote:

Originally Posted by slowhand

Thats a sweet deal..The best kind

Yup, and thanks.

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