Boiler Room: The Official Stock Market Discussion

Futuristic Eskimo

Futuristic Eskimo

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levitate said:
Ehhhh... classic case of over-diversification with bad divisions pulling down well-performing divisions....

:coffee:

I'm not concerned about those divisions that are losing money because they have many divisions that are money-makers. They'll do one of two things within the next 12 months: 1) sell off those divisions that are losing money to the Bain Capitals of the world. Or 2) sell/spin-off some of its divisions that are doing well and use the infusion of cash to adjust the shytty divisions.
Hell, its health care division alone is worth more than what it is currently trading at.

It's "go time" at the company. Big moves will be made SOON. They simply have too many valuable assets to be trading at this shytty of a price.
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Looking good so far:ehh:
 
Skooby

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hashmander

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KING WILL said:
How does this work?

Are you betting that it will hit $20 a share before 1/17/20?
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well that's what you're betting if you hold until expiration. but if you're selling before it expires it doesn't need to be even near $20. e.g., say GE rises from it's current $9 to $10 his options are going to be worth more than he paid for it ($6 per contract x 50 = $300). let's say with that rise the contract is now worth $10. so if he sold all his contracts he would get 50x$10 = $500. so that would be a $200 profit. if GE later dropped again and the contract price went to $8 he could buy 50 contracts again with the same expiration date. or it could keep going higher and he regrets selling so soon. you can buy and sell options like you do a stock. buying and selling the same option in a day even counts as a day trade. you don't have to hold until expiration. value of the contract rises and falls depending on the stock price.
 
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So, from here, as long as it doesnt go down and stay he has a chance of making money?

And, If it lets say, drops to $5 and he cancels, or sells the option will he owe money?
 
hashmander

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KING WILL said:
So, from here, as long as it doesnt go down and stay he has a chance of making money?

And, If it lets say, drops to $5 and he cancels, or sells the option will he owe money?
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no he can't ever owe based on what he did (there are other ways to actually fukk around and owe money, but not this way). he already paid the $300 for the contracts. they can either gain value, lose value or stay the same. if it's not over $20 by the expiration date the option will expire worthless, so you lose the $300 investment. if GE's stock price drops to $5 the contract will probably be down to a $1 per and no buyers, so he would just ride it out until next january hoping for better days.

edit: btw, it going up to $20 by the expiration date won't be a money maker for him either. because the strike price is what you're agreeing to buy each share for (he's in control of 5k shares). so if GE rose to the $20, he agreed to buy it at the price it's currently at and then you factor in the $300 you paid for the contract. that's an option that's out of the money. he needs GE to rise to greater than $20. if it's say $20.50 by the expiration date that's about a $2200 profit.
 
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