Board 8 > Stock Topic 21

(+) Yeah! (+)

I only put in $25k. If this goes down over 10%, itll have saved me a much bigger loss down the road from trying with $100k.

Btw, I chose NET because it meets all the criteria that I listed. Reliable since Covid, has done well on prior reports, etc. Is this foolproof? Of course not. But my point is, this will be a good representation to help make me choose whether to continue this behavior.

moonroof, what were you doing with your money before this topic that you have hundred of thousands in liquid capital?

Please don't ever try it with 100k

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It was mostly in a bond account yielding minuscule gains. I then moved it into my margin account instead.

That didn't answer the question

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wtf is a bond account? like a savings account?

Moonroof doesn't diversify. He puts large sums of money sequentially into a small number of stocks for short periods of time. So far this hasn't bit him but if he's going to play ERs like this, he's almost certainly going to get hit eventually with a big gap down loss on bad earnings.

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And uh, he must have been saving money. As opposed to spending it.

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I wasnt doing anything with it? I was letting it grow.

masterplum posted...

That didn't answer the question

Yes it did. Sounds like he just threw it in a low interest savings account and it accumulated for years.

I started saving at a very young age. Like, in my late teens before I even started working full-time. I then sacrificed my social life to move up in my field. As I accrued more money, I dumped it all into savings. I lived a frugal life.

Since turning 30, I decided to start doing things with my money. Including investing it and buying stuff for myself. Some of you may recall me buying a brand new car in the earlier versions of these topics.

Looks like NET didnt do well enough or something. Lesson learned! Will not proceed with this strategy. Thanks for the advice too.

Your NET is up 2% already so looks like maybe you are fine (edit - oops it's down 5% now wtf)

But please take a look at Solaredge graph

I want to point you to the 2nd of November 2020. They posted the earnings report and kinda missed on earnings. Stock fell down 22% in a single day.
But look at the graph before. They went up a lot.

Are you willing to let go of $22k in a single day?
In hindsight they recovered just after 3 weeks so this is nice...but what if they kept dropping?

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Yeah, basically what you want to protect yourself against is dumping 100k into Luckin Coffee before the fraud announcement, or Enron, or BP the day before the Gulf of Mexico spill, or something like that. 99% of the time, nothing like that will happen but if you are moving huge amounts of money sequentially into stocks, eventually you'll hit a company like that that gaps down 80%+ and wipes out all previous gains. It's playing roulette (supposing they gave you fair odds) by covering every number except 0. Almost all the time, you win a little bit. But eventually 0 hits and you lose a lot.

I really hope this doesn't happen to you. And the way to make sure it doesn't, is to never invest more than half your portfolio in any one thing. It doesn't matter how short a period of time you hold it, the risk of a fraud/bankruptcy/disaster announcement is always there.

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Playing earnings is a terrible idea atm. A ton of companies have had great earnings and gone down recently. APPL dropped 10% within 2 days of its earnings. It literally beat its projected earnings by 20% and still went down. Problem is markets currently in a bubble so stuff has unrealistic expectations and you still have to blow it out of the water to go up

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Well with NET I will hold until I recoup my money. The benefit of not putting $100k into it.

Sunroof posted...

Well with NET I will hold until I recoup my money.

There really is no fear in the stock market now uh

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Now holding:

ADTM
ENZC
HCMC
NTRR (up today)
ZOM
SESN
CTRM

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Well with this stock, it has good numbers and didnt really do that badly. Im confident itll go back up eventually.

If you can hold it for just under 3 months you'll probably make your money back

Honestly this may be a blessing in disguise so you snap out of the idea that playing earnings is smart. It's not smart. That's why most WSB people lose their shirts.

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Yup. Thats why I experimented with it.

If it makes you feel better I'm down $765 on TRTC despite having invested like 1/10 the money in it you did in this stock (I figure you're down something close)

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Lol. Im probably down around $2k as of this moment. But this is how you learn!

Excluding ETFs I don't generally go in more than 10% of my portfolio on any one thing

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10% is my long ball limit. Like I have 10% on plausible BP calls that expire March 5th (figure rising price of oil + likely britain coming out of lockdown + dividend incoming + OPEC summit means it getting to $23 is not too difficult from here). Have 10% on my ATHX calls. Have ~10% each on AVCT Warrants and TRTC.

If I'm doing something I consider more safe I don't really care-- limits are limiting. Currently have 20% of my portfolio dedicated to selling FUBO calls with no fear because I like that $500 a week. Chance FUBO goes to $10 and I hate life but if it takes 10 weeks to get there I've removed most of my risk anyway.

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I'm also wheeling FUBO but I would not consider it "safe" lol. I would say it's more of a medium risk thing

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I don't really think so. Aggressively selling the puts/buys can remove your risk in a hurry cause it's so volatile (I don't really think $10 is the bottom-- the bottom is probably $25)

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Fubo was 10 dollars 6 months ago and hasn't made a profit yet.

Yes you can remove risk with selling options but if you buy the stock and sell a CC and it tanks the first week you just lost a shit ton.

I personally think you have a jaded view of what safe is since you've been in a bull market so long.

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Yeah but stocks don't just tank at random. The news known is the same. No profit is priced in. It not making a profit yet was known when it was up at $60, and when it was down at $25. Further it's so volatile you can just sell super far out of the money calls and still make money even if it's less.

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Lopen posted...

Yeah but stocks don't just tank at random. The news known is the same

I mean they do rise and tank at random. And even if news comes out that is negative and it tanks your still screwed. It's not like a facebook or a google that is making money in so many ways that it can't possibly fail. If some regulation comes in about sports betting Fubo can easily half in price in a day.

Lopen posted...

Further it's so volatile you can just sell super far out of the money calls and still make money even if it's less.

If your cost basis is $40 and the stock is at $25 your going to be making barely anything selling covered calls above your cost basis. Maybe 50 cents a week if your lucky. And That's only if volatility doesn't drop.

I don't really get why your trying to justify Fubo as safe. You like the premiums and are willing to take the risk on a company you are ok with owning but that doesn't make it safe. I'm not saying its a bad move its just more than I would allocate

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So I decided to sit in on the NET earnings call since it's my biggest holding. I actully had to talk to a real person to join, they asked what company I was with and I was like I'm just an investor.

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I mean I can sell a pair of FUBO calls for $65 right now and make $100 a week if I pick two weeks out.

If it drops to like $25 I could probably sell calls for $44 (my point of re-entry after getting most of mystuff off Robinhood) for around $100 a week if I pick two weeks out. By that time it probably recovers most of what it lost too.

I just don't really think it's very risky. I'm more afraid of my shares being taken at too low a price than I am of actually losing money. Like yes the price may drop, but a sustained drop? Why would it? Especially at this point in the timeline-- it's a speculative company and we're leading into an earnings call so the price will likely go up over the next month.

Hell Roku still doesn't make a profit it's worth like 11x what FUBO is in spite of that-- the idea that stock price requires a profit is antiquated. Profit potential is what matters with stocks like this.

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Lopen posted...

I just don't really think it's very risky. I'm more afraid of my shares being taken at too low a price than I am of actually losing money. Like yes the price may drop, but a sustained drop? Why would it? Especially at this point in the timeline-- it's a speculative company and we're leading into an earnings call so the price will likely go up over the next month.

Market crash could easily bring it down or bad news. One earnings where it misses expectations could cause a major setback.

Roku actually is profitable (barely) but also has like 8x the revenue. (And is also likely overpriced)

I'm personally bullish on FUBO and think it will go up, but i'm not going to say it's foolproof.

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Well market crash will eat you no matter what you're in.

Like I'd probably feel relatively at ease having up to 50% of my portfolio in FUBO at the current price point (only reason I'm not is I think other places have higher potential profit margins with fairly limited windows I'd like to exploit) just because I can get the cost basis down really really fast with call selling. I would feel uneasy holding that much in FUBO before an earnings call, but you know what if I ride until then I should have my price per share down to like $30 which is kinda crazy.

But yeah it's just a matter of only losing money when you sell and having a decent idea of what a sensible bottom is. I don't really care if it falls to $25 again based off of nothing like it did last time-- if it did based off sports betting news yeah I guess that'd suck but the longer that takes to come the less risky the play becomes. It's basically just going with "no news is good news" with this one. "There isn't likely to be groundbreaking negative news in the next month" to me seems a fairly safe assumption to make.

But fundamentally I think we just have different definitions of "safe" vs "risky" here. I imagine thousands of dollars on calls of duration just over a month is not something you'd ever even consider doing.

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Lopen posted...

Well market crash will eat you no matter what you're in.

Like I'd probably feel relatively at ease having up to 50% of my portfolio in FUBO at the current price point (only reason I'm not is I think other places have higher profit margins) just because I can get the cost basis down really really fast with call selling. I would feel uneasy holding that much in FUBO before an earnings call, but you know what if I ride until then I should have my price per share down to like $30 which is kinda crazy.

But yeah it's just a matter of only losing money when you sell and having a decent idea of what a sensible bottom is. I don't really care if it falls to $25 again based off of nothing like it did last time-- if it did based off sports betting news yeah I guess that'd suck but the longer that takes to come the less risky the play becomes. It's basically just going with "no news is good news" with this one. "There isn't likely to be groundbreaking negative news in the next month" to me seems a fairly safe assumption to make.

But fundamentally I think we just have different definitions of "safe" vs "risky" here. I imagine thousands of dollars on calls of duration just over a month is not something you'd ever even consider doing.

What I consider riskier (warrants, buying calls) I generally will do up to 1% of my portfolio. Maybe 2%. I would consider that risky.

Something medium risk (like wheeling FUBO) with good potential upside i'll probably start at 5-6% and go up to 10% as I bring my cost basis down. (Like I think I started with 2 contracts at a time and am willing to go up to 4ish). If it stays really voltatle for a long time I might go higher if my cost basis approaches 0 but I think it will stabilize before that.

Something like Walgreens which is an estabilshed brand with proven profitability and a lot of good things going for it (new good ceo, covid shots bringing in additioanl business) I'm willing to do 10%. But that's because I think the potential downside is lower than a FUBO (Like I don't see walgreens dropping more than 20% from where I bought it but I could see FUBO in extreme circumstances dropping 50%).

Something super safe (Apple, Google) I would probably be ok with 20% but I generally don't invest too much into these anyways since upside isn't as high and most of the big ones I like are in sectors i have enough exposure to (tech mainly)

For me risk is basically looking at potential downside. I like having riskier plays cause they usually have higher upside but I want to make sure I have them spread out so a single bad bet can't erase 25% of my portfolio

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DNN is my next social arb hype stock

Small position size here, but see y'all with another 100%+ gains soon.

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I mean I guess to me it's like, if FUBO literally halved TOMORROW on bad news with substance that would be a problem, but say it takes as little as two more weeks to do it, I can probably get my entry point down to around $35, and then I could sell a further out call for $35 to keep that damage control going if the news is bad. Like you don't always have to do end of week calls either. Say it's REALLY bad news why not sell a month out call or a quarter out call. I can't imagine any news comes out where it's completely impossible it'll ever come back. Even "no sports betting" just lowers its upside-- it's still streaming TV with a focus on sports, there's a road to profitability. It just changes how long you need to hold.

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Lopen posted...

I mean I guess to me it's like, if FUBO literally halved TOMORROW that would be a problem, but say it takes as little as two more weeks to do it, I can probably get my entry point down to around $35, and then I could sell a further out call for $35 to keep that damage control going if the news is bad. Like you don't always have to do end of week calls either. Say it's REALLY bad news why not sell a month out call or a quarter out call. I can't imagine any news comes out where it's completely impossible it'll ever come back. Even "no sports betting" just lowers its upside-- it's still streaming TV with a focus on sports, there's a road to profitability. It just changes how long you need to hold.

I mean a lot of tv streaming services haven't been doing well so it's not exactly a proven model. Worst case it could drop to $25 and stay there. Yes you could theoretically eventually make money back by selling calls over and over but as someone stuck in that position in NOK let me tell you that it sucks when IV drops. And i'm also stubborn so I know i'll probably try to at least break even rather than take the loss and put my money in somewhere more profitable

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Also with your scenario that's why i like starting small and slowly building up the position after I have already brought my cost basis down rather than a going all in and hoping it lasts for me to bring my cost basis down. But that's just my personal approach.

Also note that I have like 50% of my money in ETFs at all times so really 10% is more like 20% of the money im actively investing

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I mean I guess I'm also okay with eating a couple thousand dollar loss if it feels like the right thing to do which maybe ups my risk tolerance

Whether I do eat the loss would depend on the stock and the news. I'm just saying that with reasonable assumptions, by the time earnings call happens, my cost should be low enough that I don't even mind risking holding it through earnings (which is the tentative plan, have no sold call on the table and hold through earnings and hope for rocket)

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@Menji well what was the reason for the drop?

Lopen posted...

I mean I guess I'm also okay with eating a couple thousand dollar loss if it feels like the right thing to do which maybe ups my risk tolerance

Whether I do eat the loss would depend on the stock and the news. I'm just saying that with reasonable assumptions, by the time earnings call happens, my cost should be low enough that I don't even mind risking holding it through earnings (which is the tentative plan, have no sold call on the table and hold through earnings and hope for rocket)

Yea I think he main difference is you seem to be betting on both the company's volatility and the actual underlying security. Like for you it's less that your confident the security will keep going up but rather that you can keep bringing your cost basis down.

For me I want something like AMD where I like both the volitality and the underlying to do 10% on. I would be ok just owning AMD stock without selling options on it, but the premiums are an added bonus

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Bought AKAM. Seems to have dropped for silly reasons. Im reckoning its return to form sooner than later.

Yeah that's true. I don't really see FUBO stabilizing any time soon. Too much short interest and too much uncertainty. I'm also generally bullish on it but yeah the volatility is just upside.

I figure we've also got one last hurrah if it does actually tank (since tanking itself will spike the volatility up)

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Lopen posted...

Yeah that's true. I don't really see FUBO stabilizing any time soon. Too much short interest and too much uncertainty. I'm also generally bullish on it but yeah the volatility is just upside.

I figure we've also got one last hurrah if it does actually tank (since tanking itself will spike the volatility up)

Yea I mean Like I think there's a 90% chance you make good money I just think there's a small chance you lose good money and its really just how comfortable you are with losing a good amount of money.

Also a slight rec. If you are looking to just earn premiums like this, selling puts have a higher premium than selling covered calls usually. I generally prefer puts for this reason but may sell mine slightly ITM the week before earnings for a higher premium and to potentially own the stock for earnings

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Yeah I know.

I prefer to own FUBO though cause I'm generally bullish on it. So if it moves up I want to be in with it. I should note that currently I'm selling one slightly out of the money call ($48 this week) and one far out of the money call ($58 this week) to average about my $500 a week. Like if it generally trends upward I make more money doing it that way than stalking it with puts. The ideal is I keep my shares each week and they gradually gain value (allowing me to sell further out of the money calls more confidently) whereas with puts I would need to escalate the money I put down.

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Sunroof posted...

@Menji well what was the reason for the drop?

I'm guessing the fact that they're still operating at a loss and they project 2021 to be a loss too (albeit a smaller loss than 2020). But they beat revenue expectations and they continue convert more of their free customers into paying customers (which is what all the longer holders are betting on)

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Good to know. Thanks