***Official*** 2015 Stock Market Thread

[Imp]

I've been waiting for this correction for a long time. I put $25k into an S&P tracking fund today. I probably shouldn't catch a falling knife, but I just got too tempted. If it falls another 3% next week, I'll double down.

Chances are that it'll pop back up 400 points Monday. Watch enough of this bullshit for a few years and you realize what a joke most of it is.

 

[jpiniero]

Not if it's because Wall Street found out the rate hike is happening. Yes, even a measly quarter point.

 

[JTsyo]

Wasn't expect it to drop much further from yesterday. Hit my stops on the market ETF I bought yesterday. Re-bought them this afternoon since I'm guessing it'll bounce on Monday, let's see how it plays out.

 

[Hacp]

I've been waiting for this correction for a long time. I put $25k into an S&P tracking fund today. I probably shouldn't catch a falling knife, but I just got too tempted. If it falls another 3% next week, I'll double down.

Hold your horses there. It's only a 5% dip. It takes 10% to be a correction.

 

[Attic]

I expect we pop up on Monday. The dips have been getting bought aggressively. But, this is the worst week for markets in 4 years, perhaps something is different.

I'm wondering if the Market will revalue to a 10-12 P/E, much closer to realistic in our new no growth environment vs the roughly 20PE we've been getting towards at the highs.


Beyond all that, we can't have a market sell off and not slaughter the economy, so I don't expect a rate hike, I do expect more QE. Perhaps QE this time will be designed to more directly hit Main Street rather than Wall Street.

It's very difficult to gauge the market with how removed from any fundamentals everything has gotten, especially since such excessive FED intervention ~2008.

 

[Jeeebus]

Hmm and I just transferred $80k into my fidelity account which should be there on Monday. Not sure if I should be excited or apprehensive at this point.

 

[dullard]

Hold your horses there. It's only a 5% dip. It takes 10% to be a correction.

The S&P is down 6% in two days and 7.7% from the highs (about 3 months ago). Much of the world is down 10+%. True, the S&P isn't a full correction, but close enough.

I had that money set aside to start dipping my toes into bonds (I'm getting to be old enough to have some). But looks like I'll be in stocks another year before trying bonds.

 

[brianmanahan]

i thought about tax loss harvesting VTSAX and VTIAX today, to lock in a couple grand of tax deductions this year

but then i realized that i bought some VTI and VXUS at the end of july so it'd be a partial wash sale 🙁

i suppose i'll wait until the end of august and consider it then

who knows, we could be down another %10 in a week!

 

[Attic]

Hmm and I just transferred $80k into my fidelity account which should be there on Monday. Not sure if I should be excited or apprehensive at this point.

Excited.

I'd chop it into 10k lots and invest once a quarter into SPY from here on out.

 

[Hugo Drax]

?_?

It means he paid 1.25 for call options which give him the right to buy SPY at 215 a share, regardless of how high the stock goes.

Unfortunately his call options last print today was 9 pennies.

With options you can lose your entire investment quickly in a short period of time. Once the options expire there is zero chance of a redo or waiting it out. You take a 100 percent loss on your investment.

That said it is a limited risk play, but if you overdo it you can lose your entire trading capital.

So let's say he bought 10 contracts. At 1.25 it would mean he would have paid 1250 dollars to open a position.

If spy went to 220 for example his position could be worth 5000-5500 dollars

But if it goes under like today it is only worth 90 dollars.

If spy does not break 215 by sept 18 he would be out the entire 1250 dollars.

 

[Charmonium]

All that is true. The built in premium makes it a little like betting against the house in gambling. But on the flip side, the premium can make you money if you're a seller of options. Selling covered calls (options on stock you already own) can be a great hedge if you want to lock in profits.

Of course selling naked calls and puts can bankrupt you even faster than buying options.

 

[Attic]

It means he paid 1.25 for call options which give him the right to buy SPY at 215 a share, regardless of how high the stock goes.

Unfortunately his call options last print today was 9 pennies.

With options you can lose your entire investment quickly in a short period of time. Once the options expire there is zero chance of a redo or waiting it out. You take a 100 percent loss on your investment.

That said it is a limited risk play, but if you overdo it you can lose your entire trading capital.

So let's say he bought 10 contracts. At 1.25 it would mean he would have paid 1250 dollars to open a position.

If spy went to 220 for example his position could be worth 5000-5500 dollars

But if it goes under like today it is only worth 90 dollars.

If spy does not break 215 by sept 18 he would be out the entire 1250 dollars.

Excellent breakdown.

Remember when your a simple long, all you have to be is correct about the direction of a stock (it's going up at somepoint).

With options you have to be right about the direction *and* time-frame of a price movement. Very difficult. Large time-frames for options are more expensive.

Selling call options against an existing or opening position is the most alluring use IMO. Lock in some gains.

 

[dr150]

Hmm and I just transferred $80k into my fidelity account which should be there on Monday. Not sure if I should be excited or apprehensive at this point.

Just dollar cost average in with the volatility.

This is a good "jumping in" point as the SP500 is negative for the year.

 

[jpiniero]

Just dollar cost average in with the volatility.

This is a good "jumping in" point as the SP500 is negative for the year.

If the Fed really is raising rates, this is only the beginning of the selloff IMO. Course this could be another taper tantrum, and maybe WS will get their way. Still thinking of putting in a small amount.

 

[s0me0nesmind1]

If the Fed really is raising rates, this is only the beginning of the selloff IMO. Course this could be another taper tantrum, and maybe WS will get their way. Still thinking of putting in a small amount.

I think the whole selloff over the fed raising rates is complete BS

They should have raised the rates ages ago, but regardless - we know it's coming. Whether it be now in September or in December, does it really matter? They are pussy footing with a 0.25% possible hike.

I smell a bounceback on Monday, but whenever I think I can predict if stocks will be up or down Wall street always seems to amaze me.

 

[Imp]

It means he paid 1.25 for call options which give him the right to buy SPY at 215 a share, regardless of how high the stock goes.

Unfortunately his call options last print today was 9 pennies.

With options you can lose your entire investment quickly in a short period of time. Once the options expire there is zero chance of a redo or waiting it out. You take a 100 percent loss on your investment.

That said it is a limited risk play, but if you overdo it you can lose your entire trading capital.

So let's say he bought 10 contracts. At 1.25 it would mean he would have paid 1250 dollars to open a position.

If spy went to 220 for example his position could be worth 5000-5500 dollars

But if it goes under like today it is only worth 90 dollars.

If spy does not break 215 by sept 18 he would be out the entire 1250 dollars.

What you described sounds like gambling... I got no problem with it🙂.

 

[jpiniero]

I think the whole selloff over the fed raising rates is complete BS

They should have raised the rates ages ago, but regardless - we know it's coming. Whether it be now in September or in December, does it really matter? They are pussy footing with a 0.25% possible hike.
.

This 'bull market' is almost entirely because of companies buying back stock at historical levels. They will have to slow the buybacks with the rate increase making floating the bonds more expensive.

 

[Hugo Drax]

All that is true. The built in premium makes it a little like betting against the house in gambling. But on the flip side, the premium can make you money if you're a seller of options. Selling covered calls (options on stock you already own) can be a great hedge if you want to lock in profits.

Of course selling naked calls and puts can bankrupt you even faster than buying options.

It depends. What If you sold a covered call and collected 2 dollars a share premium on leh stock and it ends up zero. You take a total loss on the stock.


A covered call does not lock in a profit. What it does is allow you additional compensation for the risk of holding the stock but you do limit your upside potential.

 

[Hugo Drax]

Excellent breakdown.

Remember when your a simple long, all you have to be is correct about the direction of a stock (it's going up at somepoint).

With options you have to be right about the direction *and* time-frame of a price movement. Very difficult. Large time-frames for options are more expensive.

Selling call options against an existing or opening position is the most alluring use IMO. Lock in some gains.

Remember a short call on a long stock position does not lock in gains, the stock could still go to zero.

Now selling a covered call on a long stock and using some or all of the premium to buy a long put position against the stock would provide a hedge against unlimited losses. But you do risk your stock being called away and having to pay taxes on the profit. That type of position is called a collar.

Now if your up 40 percent on a long stock position you could buy a put and lock in your profit without having to sell your stock. You can then use the cost of that insurance once it expires as a loss on your income tax and not have to sell the entire stock position and incur a capital gain event.

But if you do this on stock held for less than a year it resets your clock and now your back to square one and the long stock position will take another 12 months before you can claim it as a long term capital gains holding.

 

[Charmonium]

It depends. What If you sold a covered call and collected 2 dollars a share premium on leh stock and it ends up zero. You take a total loss on the stock.


A covered call does not lock in a profit. What it does is allow you additional compensation for the risk of holding the stock but you do limit your upside potential.

That's not exactly a realistic example though is it? First of all, the only stocks going to zero in a relatively short time frame are penny stocks and there isn't exactly a market in options for those. Second, ideally you want to sell options that are relatively liquid. So if the value of the underlying stock drops significantly, you can always buy the option back at a fraction of what you sold it for while keeping the stock.

It does limit your upside but that's sort of the point. You're betting that the stock is fairly valued and won't move dramatically to the upside. But you're right about it not locking in profit - assuming that the premium you earn is offset by a move to the downside.

 

[FelixDeCat]

Yeah, the dead cats will bounce on Monday and level off.

Then more selling on Tuesday. :'(

 

[FelixDeCat]

Anyone who says "downside" or "upside" is either a hustler or does not know anything.

Those are words for pitchmen and n00bs.

 

[brianmanahan]

Anyone who says "downside" or "upside" is either a hustler.

erry day i'm hustlin'

 

[Charmonium]

Anyone who says "downside" or "upside" is either a hustler or does not know anything.

I guess you don't read much.

 

[FelixDeCat]

erry day i'm hustlin'

I guess you don't read much.

Wanna buy some watch....options? Lots of upside and no downside on deese Roplexes. :sneaky: