Stocks

[TheNetworkZ]

this shouldnt be edited, this is spot on. Politics impact stocks, especially when you have a fucking nutjob withs o much power tweeting nonsense. And im really what one would say "republican" or right wing.

The post pre-edit was one of the dumbest things I've ever read. His second post was a lot better with what he was trying to get across.

 

[Pimpin]

The post pre-edit was one of the dumbest things I've ever read. His second post was a lot better with what he was trying to get across.

I dont think there's a form of articulation that is not suitable of bashing what the president is causing right now in the stock market.

 

[TheNetworkZ]

I dont think there's a form of articulation that is not suitable of bashing what the president is causing right now in the stock market.

It was hardly about the effects of the stock market tbh, just nonsense on white people losing power and constant rambling

 

[Pimpin]

It was hardly about the effects of the stock market tbh, just nonsense on white people losing power and constant rambling

ah i thought it was anti trump effects on stocks

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my bad

 

[thatdude]

Guys just a friendly reminder to keep the political talk to an absolute minimum. This is kind of a tricky thread topic because it's hard to delve deep into stocks without talking about how the political environment affects the markets. With that being said please be respectful though of others. Let's try and keep the topic about what stocks you are buying, selling, etc.

Crzd can you explain the concept of puts and calls on stocks?

 

[Adriano@10]

Crzd can you explain the concept of puts and calls on stocks?

Not Crzd but i m still gonna explain.
First of all any call and put option is based on an underlying stock. Hence as the stock price moves so does the option price.
Now there are two types there are call options which give you the right to buy the underlying stock at a specific price during a specific period or at the end of the period. With a put option being pretty much the opposite giving you the right to sell the underlying stock at a fixed price during a certain period or at the end of that period.

Now the original idea is that you can either hedge your portfolio by buying put options or you can kind of leverage it through call options. For example lets say your heavily invested in Google you fear a price drop but you don t want to sell your stake in google. A simple solution would be to buy put options that guarantee you the current price so if the price falls the gain on your put options will offset your loss on the stock so that you dont loose any money or at least way less then if you did not hedge your position. Now even if the stock moves up the loss on your put options should not hurt you too much since they usually are priced very low like 1/100th of the stock price.
(Note that 1/100 of the stock price is just a example i ll explain what influences the price of an option later. point here is if you lose the face value of your option and you hold the underlying asset in your portfolio it should not hurt you too much).

Now if you think a certain stock in your portfolio will go up you can kind of leverage it by buying cal options, you ll be able to increase your return with a relatively small investment.

Now for private investors Put and Call options are mainly bought to speculate, since you dont have to own the underlying stock in order to buy sell the options. You can buy and sell them just like stocks before their expiration day or last day of trading if it s not identical with the expiration date. Let e make an example say I think Facebook will preform great in the next couple of days so I buy a call contract.
Now this is a real example i just found this call option on Facebook:
The strike price is 130 USD (at this price i would be allowed to buy the underlying stock)
The expiration is on the 16/6/2017 ( I can exercise my right till then or trade the option till then)
Current price of the option is 7.20 USD and the current stock price of FB( The underlying) is 127.50
Now generally speaking if the stock reaches 137.2 by the expiration date i break even if the stock is higher i make a gain if the stock is lower but higher then 130 i make a loss between 7.20 and 0 if the stock is lower then 130 i ll lose the entire 7.20 usd, since remember it s a right to buy at a certain price not an obligation so the max you loose is what you put in. The beauty of this thing is you capture the whole upside potential of the stock but you only have a limited downside. Lets assume the stock goes to 150USD in this case you ll get 20USD for your option on the expiry date hence your profit would be at 177% while if you just bought the stock directly you d only have
a profit of 17.6%.

The same goes for the put option. For the same option but put hence same strike and same expiration date only difference is that it is a put i would now have to pay 9.10USD atm (Note how it s ore expensive then the call because it s already in the money). Here i profit if the stock goes lower then 120.9USD, Again if the stock is between 130and 120.9 i ll make a loss between 9.1 and 0 If the stock is higher then 130 i ll lose 9.1USD and if the stock is say 110, again you d get 20 USD on the expiration date so your profit would be 119%. And there is not really an alternative to buying put options because again short selling is not allowed for the simple investor.

I hope this helped in understanding what they are good for even though i was not able to explain it as simple as i wanted to.

Some more things to know before you guys Invest in options: They are traded like stocks so you dont have to hold them till the expiration date and you can sell them when ever you want. The option price is mainly influenced by the volatility of the underlying asset and the duration of the option usually the more volatile the underlying asset the more expensive the option also the longer the duration of the option the higher it s value. Some more terminology, if we say an option is in the money it means a call option where the underlying asset is valued higher then the strike price you have on your option, if the call option is at the money the value of the underlying and the strike price are identical if the call option is out of money it means that the strike price is higher than the current value of the underlying. Of course for put options the whole thing is reversed.

It also has to be said that the math in the above examples is simplified especially since option contracts are usually sold in 100s so if i say i buy one option contract i actually buy 100 Options and one contract does in fact not always entitle you to the rights of 100 stocks. This is also important if you give a bid on a options contract remember that the amount you put down as a bid will be counted 100 times since you are putting in what your ready to pay for 1 option and a contract includes 100 options usually.

I hope this helped a bit it s really quite simple its the right to buy or sell something at a fixed price during a certain period of time.

 

[Handoyo]

Guys just a friendly reminder to keep the political talk to an absolute minimum. This is kind of a tricky thread topic because it's hard to delve deep into stocks without talking about how the political environment affects the markets. With that being said please be respectful though of others. Let's try and keep the topic about what stocks you are buying, selling, etc.

Crzd can you explain the concept of puts and calls on stocks?

This.

We'll try to be as objective as we can. I understand that politics and stocks right now are very closely related but any sign of it getting out of control, and we'll step in.

Thanks.

 

[crzdcolombian]

Adriano@10 that was great but yea.... don't do it.

You can do both at the same time to hedge your bets but they are risky. No real good way to explain it easily either. For my MBA I took a investment corse that was 2 years long and we invested 500k in the university money.

I have how the professor explained it + math and stuff on a hard drive I believe. I honestly still don't know too well and I work for a hedge fund but they said never ever do it so I was like k Fk that then. If you guys PM me I can just email it to you a PDF of the notes he gave me on calls/puts and other stock related things. It also has math equations that I cant figure out how to post on this site. I also have stock pitches I did for 4-5 companies for the class. It can give you a better idea on the logic behind picking a stock. So you can get that green green paper :slick:

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This is my notes when I took a investment course in my MBA. At 1st it was great and I loved it but when it got to Hedging, Calls, Puts. But guys not to be a dick .... if you are just getting into stocks..... not the best place to start.

When to get in/out as well as what to invest in. Why you are buying/selling and the companies financials. You should know how they make money, how they will make more money as well as how well they are doing. Its like Gamestop before the Xbox 1 came out stock price tanked because Microsoft and Sony were rumored to be using diskless systems basically cutting them out of the market. Shit like that is a huge huge risk when buying something. Gamestop is basically that old music store that use to exist in the mall. Its selling out dated software that can go away at any second.

any way
Call Options; A call option is a security that provides you with the right to buy shares of common stock of the underlying company at a specified price during a specified period of time. Since one call option allows you to buy 100 shares of the stock, the price that you pay to buy one call option contract would be 100 multiplied by the quoted call option price. The option price is referred to as the option premium, which is determined by active buyers and sellers in an auction system, and varies over time based on several factors. These factors include the current stock price, anticipated variability of the stock price, short-term interest rates, and the time remaining to expiration of the option.
Example, you can buy a call option contract for $ 620.00 (i.e., 6.20 *100). A January 115 call option refers to a call option which would expire in January (the third Friday in January), with an exercise price of $115 per share, that you would have to pay in order to buy one share of the stock. Remember that your payments must be based on 100 shares. In secondary market transactions, the holder of a call option can also trade or sell the call option to an interested buyer. If you may sell your call option at $855.00 for a profit of $235 (i.e., 855-620). If, the call option may be sold for $240 producing a loss of $380.00 (i.e., 240-620).


Put Options
A put option is a security that provides you with the right to sell shares of common stock of the underlying company at a specified price during a specified period of time. Since one put option allows you to sell 100 shares of the stock, the price you pay to buy one put option contract would be 100 multiplied by the quoted put option price. The option price is referred to as the option premium, which is determined by active buyers and sellers in an auction system. Purchasing a put is similar to purchasing insurance, since it would protect you from unanticipated market losses.

 

[crzdcolombian]

Target went down $10 a share because of a weak quarter it's a interesting buy opportunity right now

 

[crzdcolombian]

So did any of you get into stocks they have been going up a ton under Trump.

Walmart has gone up a ton past few days.


Current watch list
Mattel - Barbie maker and have license to make DC comic toys
Under Armor - tanked recently but interesting buy. Sales went down because a big sports store in US closed. Then went down again because CEO praised Trump and pissed off liberals. Has the best football player(Tom Brady), basketball player(curry) and golfer(some young white dude). Selling at half its 52 week high. Huge negative is it has no dividend.

I was wrong on Apple but I still don't like their stock especially with the Samsung galaxy disaster. For a company that makes only 1 product scary that can happen.

 

[Adriano@10]

First of all I wanna thank Crzd I m usually not into retailers but once you mentioned target i made a quick technical analysis and decided that you might have something going there. So i bought a couple of call options made around 85% (Buy @ 1.44 sell @2.68) in a month so thanks buddy would probably have missed that one.

Now i would like to talk about two stocks that are still intriguing me Nintendo(NYTDOY) and Twitter(TWTR).
Let me start with Twitter first of all they just had their conference call and I was/am kind of confused by the reaction of the markets to their Q4 results. Now for a company like TWTR Monthly active users, daily active users and user engagement are very important now all three are on the rise both year over year and also compared to Q3. Which is a strong sign on top of that twitter reached 31 mio unique viewers with their video contenet and on their video content they had a 95% ad completion rate which is huge. Revenue just as the EBITDA ratio are also on the rise but are lagging behind on the user increase and the increase of daily activity. Also while growth in the us is slowly stagnating growth in Europe and asia is picking up and there is still huge potential in these markets. It also has to be said that they missed the revenue guidance which is bad but the markets reaction still seemed harsh to say the least.
On top of that TWTR cut a lot of the unnecessary crap and cut down costs while focusing on core business instead of doing a bit of everything but nothing right. Cost cuts will still go on and due to high restructuring costs the effect of these cost cuts might only kick in in the financial year 2018.
Now what intrigues me is that all the key metrics for TWTR are good yet the stock took a big hit when the figures were released, which did not make much sense to me. Yes revenue is lagging behind user growth and engagement growth but thats perfectly normal. There are only two big question marks in their financials one is the fact that they missed revenue by 3%(717 instead of 740) and the one that astonishes me even more is that they give us an EBITDA estimate for Q1 17 of 75/95mio about half of what they made last year in Q1. Now again all this info imho does not warrant the 16% price drop TWTR took right after publishing these figures. One sign of that is also that jack dorsey co founder and ceo bought 7 mio of the stocks worth after the plunge.
I currently feel like TWTR has keept EBITDA forecasts low on purpose just to make it easier to hit that target next time. Also the fact that Jack invested even more of his own money into TWTR shows that he believes in it and it s management team.

Bottom line IMHO TWTR has repositioned it selfe very well on the markets especially with the NFL coverage and the presidential inauguration. Also even thought growth in north america starts to slow down there is still huge growth potential in europe and asia. Also with trump as a president TWTR is not gonna loose any of it s importance over the next 4 years for sure. I feel that a lot of people are disappointed in twitter that it could not live up to it s hype but just because a company probably will never turn into a google or FB does not mean it s not an attractive investment. Anyways IMHo if you believe that there is enough place on the market for a second big social media player behind FB then i would put my money on TWTR and even if TWTR only becomes half the size of FB at 16$/17$ you d still make a good buy.

Disclosure: I m currently holding call options on TWTR

I know i said i ll also talk about nintendo but before i waste time let me know if you guys even appreciate these posts.

Also crzd apple will not fall in a day it wil take some time i highly doubt that they outperform the market over the next 2/5 years though.

EDIT: almost forgot anybody who is ready to take some risk weed companys look very exciting especially the ones in Canada where we expect Weed to become legal during this year or latest at the beginning of 2018. What can I say other then your selling a drug that is very cheap to produce so usually you get a very nice profit margin. The problem will be that especially in growing Economies of scale will be very important and picking the right company now is hard because it s hard to say how fast and how easy they can scale once it becomes legal. If anybody wonder why canada and not the US problem is in the US there is no grower currently listed on any stock market only supply companies.
Anyways here are the companies i ll be looking at: Canopy growth group, kush bottles, supreme pharmaceuticals and organigrow.
Now there is a substential risk of picking a looser in a new market but imho the opportunities are huge. Anybody who ever grew weed knows that it s quite cheap to produce even professionally and you can sell a gramm for 8/10 dollars while the variable costs of growing a gramm of weed are around 1.50 max.

 

[crzdcolombian]

I don't like twitter or Facebook but if I was to buy either I'd go with Facebook they actually make money. For me both are over valued and I don't get how they make money or can/will be profitable. Their price is based on potential growth and other bullshit.

Nintendo has been shit since Super Nes. New system will fail and has 3 launch titles one being basically a Wii sports demo game that isn't free!!! Nintendo will become a 3rd party after this. They already making IPhone games just a matter of time before they make PS4/Xbox ones. 1 MARIO, Zelda and Mario Kart game every 4 years isn't good enough for a company.

Yea man I love Target. I hold 500 shares(close to 3k a year in dividends). Trading close to its 52 week low so might buy more.

What analysis do you do? I like the PE but am more of a dividend buyer and look for things close to their 52 week low. Like I don't go for huge gains.

 

[Adriano@10]

On TWTR and FB coming from a buffet fans of perspective i get what you are saying and yes their price is based on potential growth. Also FB with a P/e of 40 imho is not so much solely based on growth potential especially considering the average P/e of the SP 500 is around 25/26. And both are making money of ads and onlin ads are still growing, as i said before TWTR with a ad completion rate with sound on of 95% on their video platform is amazing and advertisers should take notice. Anyways i guess I lean towards these companies since i made a huge profit of FB bought @32 and the year i studied in SF one of my favourit professors was partner at a VC in the bay are so he gave us a lot of inside on how to value them.

On Nintendo to put it simple how was nintendo above 30 since the pokemon go release even though they only had like 30% of the right, and then when they release Mario and pokemon sun and moon which sold like crayze yet the price drops? I know the mario i phone game was kind of a flop but any other developer whose game gets downloaded as much as Mario was for the I phone usually get a boost none of it was seen in the Nintendo stock price. Also i feel like the brand value of nintendo gets underestimated I d much rather go into a Ninetndo them park then a disney one.

On the analysis it really depends I love P/E it s Imho the fastest metric to make a peer comparision which is also use full. From there on it really depends if i just want to buy options or hold the stock for less than a year then I usually just check the financials real quick for any red flag meaning i check gross and net margins, ROIC, ROE, ROA, debt to equity, debt to market, days payable/recivable as well as Inventory days. If there i dont find anything that explains to me why the price is as low/high as it is the decision that i wil invest is made. Since IMHO whenever you invest less the a year timing is almost more important then the stock picking, I then do 3 months bollinger bands and 3 and 6 month moving averages to determine when to open and when to close.

When i do long term investments i usually leave away bollinger bands and moving averages there i care more about the management team and the business model. And there i also dig deeper into the financials.

On the gain side i usually search for stocks where i feel like 10% profit a year is realistic. I know this is unprofessional if i dont compare it to a bench market, but i dont really care since i myselfe can live of a 10% profit a year and i never had a customer whom i returned 10% complain.

On a side note anybody wanting additional investment resources check seeking alpha i find it quite useful.

 

[Il Divin Codino]

Very interesting thread, thanks for all the info guys. For a long time I wanted to invest in the stock market but have zero knowledge on it and don't know where to start. If I were to invest in a company it would be Nintendo, and even if I don't do it it's very interesting to read your opinions, so please Adriano@10 feel free to give your thoughts about it

I admit I'm a bit of a fanboy, but I also think the Switch has a lot of potential, while it's true WiiU and Wii had very little third party support, Nintendo portable systems always have massive support, and it seems Sony won't be announcing a PSVita 2 or something soon, so Nintendo will have all the portable market. How much is a Nintendo share right now?

 

[Ronin]

Sony not to keen to target portable market because of smartphones. Why buy an extra device when you can use your phone to play games. It's not like smartphones aren't powerful to run Nintendo-like games. Switch will have a niche market, like any usual Nintendo product.

 

[Il Divin Codino]

Sony not to keen to target portable market because of smartphones. Why buy an extra device when you can use your phone to play games. It's not like smartphones aren't powerful to run Nintendo-like games. Switch will have a niche market, like any usual Nintendo product.

Smartphones didn't stop Nintendo from selling 60 million 3ds, and considering Pokemon games sales on 3DS increased after the launch of Pokemon Go I think Nintendo will be using smartphones to advertise their games on Switch.

 

[TheNetworkZ]

I agree with CRZD on investing into Under Armour. Based on current trends they will pass Nike in popular sporting goods brands.

Another potential good one is New Balance as they are starting to invest more professional sports and are overall looking very good recently. Not sure what their stocks are like though.

 

[Adriano@10]

Why do you guys think under armour(UAA) is gonna be a good investment?
Imho it s overvalued if anything ATM. It has a P/E of 49.6 with most of it s peers being around 25/26 nike at 25.5 and adidas beeing closest to UAA at 31.7 P/E on top of that over 23% of the public float are sold short which is a lot and indicates a high risk.

I understand the love for UAA since i think it s management has done an Amazing job and I feel like Kevin Plank (founder and CEO) Is an enterpreneur through and trough. He knows what he wants he has a clear vision of the company and has been great at implementing it s strategy and convincing his Employees of his vision.
What i dont see happening is UAA grabing big parts of the market share of nike and Adidas especially when it comes to casual ware. And Imho thats what would need to happen in order to justify todays share price and in order for the stock to still make substantial gains.
And i just dont see that happening while they make good sports ware they are way behind in the casual stuff and especially in shoes where nike and adidas and even asics are selling limited sneakers for ridiculous prices.
Also while UAA has a lot of great athletes i would suggest that most of the merch they sell other producers profit more. I mean steph currys game shirt is Adidas and tom brady s is Nike and in the time i was living in the bay i did not see many people with steph wear that was from under armour.

Bottom line for me UAA would be a hold at best atm. If you wanna invest long term and you really believe in Kevin Plank then feel free to invest even though the stock looks kind of expensive, but in order to make it work UAA will have to take big market share from nike and adidas which i dont see happening.

Also for everybody whose going to invest in UAA consider that there are 3 types of Underarmour shares A,B,C now A are normal share with one voting right per share, then there are B shares which can only be held by Kevin Plank they have 10 votes a share and ensure that Kevin plank is in charge i.e. he holds 16% of the capital and yet he owns 63% of the voting rights also since B shares can only be held by Kevin Plank they are not traded. Then there are C shares without any voting rights. Now those C share trade at around a 10% discount compared to A shares. Normaly you pay that extra for the right to vote. But why would i pay extra for a right to vote when my vote is pretty much useless? I mean Kevin Plank will always decide what happens no matter how you vote. Also with the way he set up UAA I really dont think he s ever gonna give up control so why the fuck should i pay a 10% extra for a voting right that is useless?
In theory those two prices should converge over the long run so in theory the C share (UA) should outperform the A share (UAA). I m saying in theory because over the last couple of months that spread got even bigger at times. Anyways bottom line if i was to invest in under armour id go for the C shares without a doubt in my mind.

New balance is gonna be hard to Invest in since as far as i know they are not listed on any public market and are pretty much still a private company.

 

[crzdcolombian]

Haha yea I was going to put money in Under Armor till I saw they are trading at 40x earning haha. Was like fuck that. I don't buy stocks because of potential sales. Plus their shoes are super ugly. UA will never surpass Nike. They will be #3 at best but that is ok. I own lowes instead of Home Depot because I personally like that store better don't care it will always be #2. Good growth potential + dividend.

As for why they don't have the casual market their clothes are kind of ugly and need a new logo. Two UA Looks funny. I prefer the swoosh

I am watching under armor and think it can go to under $15 then I will look at it again. That is why it's on my watch list and not my brokerage account. As for new balance their shoes and cloths are fugly. No never see any one wearing that shit and I live next to their corporate headquarters in Boston. I'd pass. I only buy stuff I like.

 

[TheNetworkZ]

UA already passed Adidas in sales by .1 million. It's not dumb to think they will someday pass or come close to Nike in the upcoming years.

Also no one cares what you think is ugly, New Balance as a brand is growing and that's a fact. I don't care what you buy either, as that was never the point I was bringing up.