Board 8 > Stock Topic 19

(+) Yeah! (+)

Were we expecting AMC to plummet like this? Seems like you guys are making elephant dollars off it it meanwhile I'm currently down $600 =/

---

Hold strong. You havent lost money until you cash out.

---

DoomTheGyarados posted...

Actually better point, LotM if you aren't going to actually post stock advice or positions which this topic series is for please go back to the politics cave, thanks.

In general there is no place for "I told you so" in the stock market
Because-
1.Anything can happen. If you are so sure about something, why don't you put all of you money where your mouth is?
Every single cent

2. In general "told you so" is annoying. Even more annoying to hear it is if you lost a lot of money

Best example of 1 is SIGL. The fake Signal stock that was pumped after Musk "Use Signal" tweet
There were plenty of articles all over the Internet about SIGL not being the same company and they were all posted during the weekend. You would have expected it to be the easiest short evee, but Monday came and it was up 130% more.

Of course it evantually died, but it took a while

---

Musk announced that he was getting off Twitter for awhile lol.

Blur, I can hold AVCTW through March! Is it liable to drop like 20% though? I have to read up more on it.

So @Sunroof let's go into the theory a bit on why I think covered calls are really smart for you.

Sunroof posted...

Im usually buying $50k at a time. So if it was at $13, then thatd be around 3,846 shares.

Let's round up to 4000 shares for the sake of argument, and let's assume you get in at current prices (when I started writing this post). That assumes a $13.74 share price, the 2/19 $15 call being $0.40, and the 2/19 $12.5 call being $1.55. So my strategy for you would be to do the following.

1. Buy shares as usual
2. Sell covered calls on literally every share you own (sell to open)
3. Wait until the contracts expire. You never buy these contracts back ever. As you get better at this you can open it up as an option but for now just assume you'll never sell them.

In basic terms the net effect of what you're getting here is this.

• Your money becomes "held" in EVRI because you're obligated to hold onto the stock through 2/19 to fulfill the contract as needed
• You reap the upfront cost. For the $15 call you make the price x 100 x 40 (number of contracts you hold). So you sell the $15 call you make $0.40x100x40, or $1600. For the $12.5 call you make $1.55x100x40, or $6200.
• If the price of the stock is equal to or higher than the strike when the contract expires, you must sell at the strike. For the $15 call that means you're selling your EVRI at about a 10% gain which is win/win. You'd make a profit of $1.26 on each share, so $5040,as well as keeping your contract fee of $1600, for a total gain of $6640. For the $12.5 call, you're technically selling at a loss, but even at $12.5 you'll make a small net gain on the transaction (your effective cost on the stock becomes what you paid for it, $13.74, minus the price of the contract, $1.55 or $12.19, meaning you basically bought 4000 shares at $12.19, sold at $12.50. You basically make $1240 in this case.
• If the price is lower than the strike, you keep the stock, meaning you got $1600 or $6200 for free, just as a price for freezing your $50k in place. Now this can be somewhat a bad thing. For instance if EVRI dropped to $9, you'd be holding bags at some level. But if you want to damage control this outcome the $12.5 call sell is a bit better for you, as you'll always keep the full contract premium
• Of course if the price goes way up, your gains limited-- for instance if it goes up to $20 before 2/19, you're still only making $6640 with the $15 call sells and $1240 with the $12.5 call sells

But either way, it's guaranteed very safe money if you really believe in the stock you're backing. I'm doing this with AAPL once my E-Trade money clears.

You can get more advanced with it later, but for now I'd start with this. Let me know if this made sense.

---

Also, we have a bunch of earnings coming out today / this week:

Amazon
Google
Pfizer

Just to name a few.

my position for amc has always been long. Like, my calls are 1-2 years out.

---

Lopen posted...

So @Sunroof let's go into the theory a bit on why I think covered calls are really smart for you.

Let's round up to 4000 shares for the sake of argument, and let's assume you get in at current prices (when I started writing this post). That assumes a $13.74 share price, the 2/19 $15 call being $0.40, and the 2/19 $12.5 call being $1.55. So my strategy for you would be to do the following.

1. Buy shares as usual
2. Sell covered calls on literally every share you own (sell to open)
3. Wait until the contracts expire. You never buy these contracts back ever. As you get better at this you can open it up as an option but for now just assume you'll never sell them.
In basic terms the net effect of what you're getting here is this.

* Your money becomes "held" in EVRI because you're obligated to hold onto the stock through 2/19 to fulfill the contract as needed
* You reap the upfront cost. For the $15 call you make the price x 100 x 40 (number of contracts you hold). So you sell the $15 call you make $0.40x100x40, or $1600. For the $12.5 call you make $1.55x100x40, or $6200.
* If the price of the stock is equal to or higher than the strike when the contract expires, you must sell at the strike. For the $15 call that means you're selling your EVRI at about a 10% gain which is win/win. You'd make a profit of $1.26 on each share, so $5040,as well as keeping your contract fee of $1600, for a total gain of $6640. For the $12.5 call, you're technically selling at a loss, but even at $12.5 you'll make a small net gain on the transaction (your effective cost on the stock becomes what you paid for it, $13.74, minus the price of the contract, $1.55 or $12.19, meaning you basically bought 4000 shares at $12.19, sold at $12.50. You basically make $1240 in this case.
* If the price is lower than the strike, you keep the stock, meaning you got $1600 or $6200 for free, just as a price for freezing your $50k in place. Now this can be somewhat a bad thing. For instance if EVRI dropped to $9, you'd be holding bags at some level. But if you want to damage control this outcome the $12.5 call sell is a bit better for you, as you'll always keep the full contract premium
* Of course if the price goes way up, your gains limited-- for instance if it goes up to $20 before 2/19, you're still only making $6640 with the $15 call sells and $1240 with the $12.5 call sells
But either way, it's guaranteed very safe money if you really believe in the stock you're backing. I'm doing this with AAPL once my E-Trade money clears.

You can get more advanced with it later, but for now I'd start with this. Let me know if this made sense.

I appreciate you putting time into explaining this for me. Its a bit over my head at the moment so Ill have to re-read it when I get off work later. It sounds like it is much safer than what I normally do though, and I can still make big gains somehow.

I'm happy to go into details as you need.

The key is you do it with stocks you are very confident will not crater into the ground. That's why I'm planning to do it with AAPL, despite the relatively lower premium per share than certain other companies. Keep in mind you're basically getting that premium monthly (or weekly if you choose a stock with weekly calls), so it becomes stable income, and that because the Feb 19 Call is about 50% in you'll be getting a higher amount for the full month call, so you'd be getting a bit more than the figures I'd outlined for March once the Feb contracts expire. For instance the March 19 call prices are $1 for the $15 and $2.10 for the $12.5, which means you'd be getting $4000 or $8200 up front, using that same logic outlined above, but would need to hold through March 19 instead.

---

Lopen in that example, how can I lose money?

Sunroof posted...

Lopen in that example, how can I lose money?

If the stock drops you have to hold it, and also you lose potential gains if it blows passed your strike price, because youve already been forced to sell it.

---

What if the stock drops when the calls expire, I keep holding until it goes back up. Can I do that?

And is that price that Im then holding the stock at the same price that I originally bought it at, or is it the lower price that accounted for deducting the fee and whatever?

If the price goes down you lose money by having stocks that are less valuable than the amount of money you put into them. So at that point your money is tied up in a long term investment until the stock recovers.

---

Sunroof posted...

And is that price that Im then holding the stock at the same price that I originally bought it at, or is it the lower price that accounted for deducting the fee and whatever?

Assuming the call expires worthless it does not effect your cost basis from a tax perspective, but from a financial perspective it does.

Ie you buy 100 shares at $10
You sell a covered call for $1 and it expires worthless

Your tax cost basis is still 10 but your effective one is 9.

---

So the way you lose money is if EVRI goes well below entry price and you holding contracts dissuades you from panic selling. This is all kinda theory, but let's lay out a hypothetical

For instance say the stock price goes down to $9 by 2/19. Say under normal circumstances you would have panic sold at $12 for a $7000 loss, and because of your contracts you chose not to. That means because it's now at $9 you'd lose $12000 more.

BUT you'd still have the shares when the contract expires, and you'd have the price they gave you for the contracts, so your situations after contract expiration would be as follows

No contracts - Lost $7000, 0 shares of EVRI
$15 contracts - down a net change of $17400 value, but you still have 4000 shares of EVRI
$12.5 contracts - down a net change of $12800, but you still have 4000 shares of EVRI

If it goes up or breaks even you always win. And if you just hold you may go back up to the starting point anyway so you still win.

---

So a stock can be at $13.74, but I can effectively buy it at $12.19? And then when I sell it, will it sell at the non-$1.55 deducted amount?

Xiahou Shake posted...

Were we expecting AMC to plummet like this? Seems like you guys are making elephant dollars off it it meanwhile I'm currently down $600 =/

Yes

---

Sunroof posted...

So a stock can be at $13.74, but I can effectively buy it at $12.19? And then when I sell it, will it sell at the non-$1.55 deducted amount?

So you'll be obligated to sell it at $12.50 at any point before Feb 19th. However if it goes lower than $12.50 by Feb 19th, and you hold through contract expiration you can later sell it for higher than $12.50, and you keep the up front you got from the sold calls when that happens

---

masterplum posted...

Yes

News to me! Seemed at the time like everyone was exciting to be buying the slight dip down to $13. Well, I guess I'm already locked in. No real choice but to see if this bounces back.

---

I was not expecting AMC to drop back down this low, personally. I figured $11 was about the bottom. I overestimated diamond hands or underestimated market manipulation.

---

Are we expecting AMC to climb back up?

Xiahou Shake posted...

News to me! Seemed at the time like everyone was exciting to be buying the slight dip down to $13. Well, I guess I'm already locked in. No real choice but to see if this bounces back.

To be honest you should be figuring out what YOU think a company is worth and what it will be worth in x years if you plan to hold it that long before getting in.

If you think its worth more than $13 you should be content to keep holding. If you think its worth less you can either gamble and hope it goes up short term due to momentum or start trying to cut your losses by selling covered calls to bring your cost basis down while volatility is still high.

---

Realistically, why would AMC go back to pre-covid price in a normal market?
They are about a year with all theaters closed and the recovery is going to take a few more months
AMC fair value should be, in my opinion, around 5-6

---

So my thought process for AMC now is

https://www.marketbeat.com/stocks/NYSE/AMC/short-interest/

Back to this chart. I know that the dates are simply the days that short positions were posted, not opened, but there are still a bunch of short positions that were posted when the price was way below where it is trading now, even after all the bullshit. Think a squeeze is still possible, or do you think it's more likely that most or all of the short positions have already been covered?

Also here's a reminder of how dumb WSB can be and why never to be like them:

https://www.reddit.com/r/wallstreetbets/comments/lawqwr/nice_dip_i_just_bought_another_775_shares_of_gme/

Bought a shitton of GME at 138...on margin.

---

All I can think about whenever someone mentions buying stocks on margin:

https://www.youtube.com/watch?v=7Icego2KRbg

---

Nanis23 posted...

Realistically, why would AMC go back to pre-covid price in a normal market?

Well no, it wouldn't.

If you're long it will though. I agree with Chris that it's a good hold now.

That being said if you wanted a squeeze pop, I'm not sure anymore. I think a lot of shorts probably covered. But we'll see. A lot of short sells were well under even the current price so we could still see it go up.

---

StartTheMachine posted...

Think a squeeze is still possible, or do you think it's more likely that most or all of the short positions have already been covered?

I think the fact that amc diluted shares to raise capital to cover all there debts and are no longer in threat of bankruptcy makes the incentive for shorting ~4-5 way lower. I wouldn't be suprised if a lot of people shorted in the teens though but they might be selling now.

---

StartTheMachine posted...

So my thought process for AMC now is

https://www.marketbeat.com/stocks/NYSE/AMC/short-interest/

Back to this chart. I know that the dates are simply the days that short positions were posted, not opened, but there are still a bunch of short positions that were posted when the price was way below where it is trading now, even after all the bullshit. Think a squeeze is still possible, or do you think it's more likely that most or all of the short positions have already been covered?

Also here's a reminder of how dumb WSB can be and why never to be like them:

https://www.reddit.com/r/wallstreetbets/comments/lawqwr/nice_dip_i_just_bought_another_775_shares_of_gme/

Bought a shitton of GME at 138...on margin.

Yikes. Hope he didn't get margin called this morning. This is not the stock to buy on margin, which is dangerous with the least volatile stocks.

---

HeroicCrono posted...

Yikes. Hope he didn't get margin called this morning. This is not the stock to buy on margin, which is dangerous with the least volatile stocks.

It went to 88 right? I think he almost certainly got wiped out

---

masterplum posted...

It went to 88 right? I think he almost certainly got wiped out

I'm seeing a daily low of 74 although it probably was only below 80 for minutes at most.

---

You know what really sucks

I tried to sell 1000 more AMC this morning knowing the inevitable morning dip was coming and accidentally bought

Pure fat finger mistake of hitting "add to position" instead of "reduce position" on my phone. Since the stock was so volatile and I almost always use limit orders, I was trying to get the order placed as fast as possible.

Selling those accidental shares for a loss is something I'm too stubborn to do, so AMC better hit 9.51 again soon, where I bought them

---

A misclick once caused me a $200 loss just because it snowballed
I wanted to buy a few stocks of AAPL but instead I clicked sell so it turned out to be me shorting Apple
Realizing the mistake I closed my position as soon as I noticed and it was $30 loss

So I was like "fuck this no way I am letting me lose $30 on a misclick"
So I tried to daytrade TQQQ

Lost $170 more lmao

---

Nanis23 posted...

A misclick once caused me a $200 loss just because it snowballed
I wanted to buy a few stocks of AAPL but instead I clicked sell so it turned out to be me shorting Apple
Realizing the mistake I closed my position as soon as I noticed and it was $30 loss

So I was like "fuck this no way I am letting me lose $30 on a misclick"
So I tried to daytrade TQQQ

Lost $170 more lmao

Hey, it could have been worse. You could have tried to buy GME at $4 and sold instead, and then one day you get a call saying your account has been wiped out and you owe your broker money.

---

AMZN gonna take off after ER

my 1 share is going to be happy

---

Menji posted...

AMZN gonna take off after ER

my 1 share is going to be happy

If AMZN announce the long awaited split...oh boy

---

Whats ER?

---

Menji posted...

AMZN gonna take off after ER

my 1 share is going to be happy

Thanks for this reminder, just bought 10 shares.

Tony, ER = Earnings Report

---

Disclosure - I bought mine a couple weeks back

---

Menji posted...

Disclosure - I bought mine a couple weeks back

This is the proper way to play Earning Reports

Buy a few weeks before, sell on the run up (or hold through if you have the utmost confidence)

Very high chance Amazon actually drops after the ER even if it's fairly ho-hum.

---

Do you buy AMC now at around $7? Or is the dream over?

---

buy a 1/23 call right now imo

---

Yeah, I worry that a lot of the upside is already priced in. I just want a cool 5 to 10k trade from it. I upped to 13 shares with those last couple on margin. But I have a shitton of margin available still and AMZN isn't the type of stock to swing wildly or anything, so very low risk there.

WSB has gone back to being loss porn again if you just change the settings to "new" lol

---

i logged into my account expecting to wince at big red numbers, but apparently everything except for amc/gme went up today

i knew it would be the case, but everything i see makes me more confident in sticking with VUG and the S&P 500

---

Is the fun over should I not buy AMC cheap

My advice is buy AMC now if you are willing to hold long or you are able to sell covered calls

If you just want a quick WSB surge realize you're gambling almost as hard as Gamestop at this point. That don't mean it can't happen but it should be upside to your play not why you get in

I will say I don't think the stock can go much lower. It was trading at $4.5 before the games just on bankruptcy news, and bankruptcy news now is better than that news. Of course shares are diluted but still, it's in MUCH better position now than it was a month ago when it was at $2-$3

---

I expect a dead cat bounce for AMC and GME either tomorrow or in two days, they usually happen
Maybe I will drop $500 for the sake of it

---

I still can't believe I got greedy on AMC after my account hit 100k and bought back so fast

So so so so so stupid must turn off emotions for trading

Meanwhile GSMGW and IEAWW are way the fuck up if I just stuck with the plan and threw 20k back in each of those when I hit 100k

Always stick to your plan

---

LOL WSB is also down 500k members

the dream is dead

hedge fund bros the dream is now on you to pump AMC

E: nevermind I just had an old tab of it opened on my computer, keep HODLing broke bros

---