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rtlguru said:   
Bend3r said:   
rtlguru said:   
  
Deep itm options are just a way to ramp up leverage for a position. Nothing more, nothing less. You can win big or lose big depending how much much leverage you want. I play deep itm options 95% of the time vs out of the money. I have made huge gains and huge losses. Proceed with caution.

[...]

I've attached my gambling win for this week as an example. Last week, i had similar options before earnings and lost 200k. 

Isn't a 67.5 strike on a ~$70 stock just an ITM option rather than a deep ITM option? I guess "deep" has no hard definition. Deep ITM options actually allow only lower levels of leverage compared to barely ITM or OTM options. Sure, they do allow more leverage than buying the stick directly with no protective put.

When i buy "deep itm" options, mine are at a strike price ~80% of the underlying. This makes the time premium tiny compared to the total option price

  
Depends on your time frame. I consider any option deep in the money if there is very little premium to intrinsic value. For weekly options, a 67.5 strike on a 70 dollar stock is considered deep itm. There is no point in going "deeper" on a weekly option because you only save pennies on premium, but risk much more should the stock tank. For GILD, I actually went less "deep" than i normally do because of where the stock was and the price action the week before. the 66/65 area is major support so if it broke under, there was a risk of it tanking, so I opted to pay a little extra premium to risk less total cash. 

  I would agree with this.  Here is a typical trade I will make/made: underlying 21.85 when made today.
02/17/2017   Buy to Open 10 Contracts UAA Mar 17 2017 20 Calls Limit at $1.95 (Day) Filled at $1.95

 

rated:
I work for UPS and can buy class a stock (not sure what this means) for a 5 percent discount but I have to hold it for a minimum of two years. I have never bought individual stock before because of the risk but is this a no brainer for me because of the discount?

rated:
5% is not a lot, if ups goes down more than 5% you are at a loss.

rated:
dabrian said:   I work for UPS and can buy class a stock (not sure what this means) for a 5 percent discount but I have to hold it for a minimum of two years. I have never bought individual stock before because of the risk but is this a no brainer for me because of the discount?

Not worth bothering and taking a risk -  particularly when, 1. Management says that they couldn't make money on more bumsiness, 2. Bezos is working on his own delivery system. You woukd be better off buying a diversified fund. 

rated:
dabrian said:   I work for UPS and can buy class a stock (not sure what this means) for a 5 percent discount but I have to hold it for a minimum of two years. I have never bought individual stock before because of the risk but is this a no brainer for me because of the discount?
  I believe the most significant risk is that you will have too much of your future tied up in one company. If UPS starts declining, the stock will decline and you could potentially lose your job or face stagnant wages, etc....for this reason, I would avoid the stock purchase.

rated:
The risk in investing in company stock, whatever the company is, is that you are not diversifying. Risk is concentrated because the fate of your investment and the fate of your job are correlated rather highly. If your company experiences a downturn, the stock price drops while you increase the risk of a job loss. Conventional wisdom would say don't do this. Putting that aside, if you had a broadly diversified portfolio and you don't mind the company stock as an investment, the discount could be worth it. But, a two year lockup still seems risky.

rated:
dabrian said:   I work for UPS and can buy class a stock (not sure what this means) for a 5 percent discount but I have to hold it for a minimum of two years. I have never bought individual stock before because of the risk but is this a no brainer for me because of the discount?
  
Mine is 5% but I can sell immediately.  I do it, but even then it is barely worth it.

My GF can buy hers at a 15% discount and must hold for 1 year.  Hers overall is definitely worth it in the long run, but shes been getting burned over the last year or two because shes still managed to lose $ with a 15% discount.

rated:
I've never been eligible for something like that, so I'd like to learn more. Is it legal/permitted to hedge those holdings in another account? e.g. Buy at a discount in company account and hold for the hold period, while holding a short position (either short the stock, or via options) in another account? I could see the fees/borrowing costs and such eating up a few %, but on a 15% discount I'd think there is enough room.

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SpeedingLunatic said:   I've never been eligible for something like that, so I'd like to learn more. Is it legal/permitted to hedge those holdings in another account? e.g. Buy at a discount in company account and hold for the hold period, while holding a short position (either short the stock, or via options) in another account? I could see the fees/borrowing costs and such eating up a few %, but on a 15% discount I'd think there is enough room.
  
Most companies have language in your employment contract that shorting or holding short option positions in the company is grounds for termination.  Whether theyd ever find out is another story, but potentially getting fired to reduce variance doesnt exactly reduce variance if you catch my drift.

rated:
SpeedingLunatic said:   I've never been eligible for something like that, so I'd like to learn more. Is it legal/permitted to hedge those holdings in another account? e.g. Buy at a discount in company account and hold for the hold period, while holding a short position (either short the stock, or via options) in another account? I could see the fees/borrowing costs and such eating up a few %, but on a 15% discount I'd think there is enough room.
  I think its called as "Insider trading" if your transaction falls under the black out period of your company's restricted period.
Generally you should not do that

rated:
rtlguru said:   
DavidScubadiver said:   Risk tolerance is about ability willlingness and need. What was your goal and what is your goal now? It there is no need to take outsized risks because you are at your goal, the gamblin/market time ought to stop. Better to have than to have and lose. Thanks for sharing. (You have the willingness component in spades but are out of balance here). I don't think you have the ability to take risk if you have to borrow from your folks to make investments in bad times, so that's another thing to consider. 
  Just to add some color to the money i borrowed from my parents. I basically convinced my parents to sell their house because I felt the housing market was a bubble and they didn't like their house anyway. I took the money from the sale and told them I would invest it for them and buy them a better house once markets dropped.

We were poor immigrants who came with 10k in cash to our name. My dad almost filed for bankruptcy in 1998 but through some good fortune, made enough to buy a modest house and save some money. I definitely have a scarcity mentality. I think what I have isn't enough and I need more. Yes, I know it's irrational, but when you grow up worried about being broke, that trauma stays with you even when circumstances change.

I used to think 1 MM was enough, then 3MM, then 5MM, and now my goal is 10 MM. This is how I know I have a gambling problem. Instead of thinking, "I have enough. I can invest long term and live comfortably", I think, wow. I went from 500k to 5 MM in a year. That means I could go from 5 MM to 50MM this year! How great would that be. Trading is basically like a drug to me now. I need more and more profits to get the same "high". Buying options is the hit of cocaine. 

I've been going to therapy for 5 weeks now and I've managed to keep my "bets" to 10% of my total portfolio so far. The irony is, if I traded this year like I did last year, I would probably be well over 8MM right now

 

  
Interesting..

Does RTL in your name mean Resistor Transistor Logic, or more likely Register Transfer Level? You are a smart EE, and took up this as a challenge? If so, awesome! 

Easier said than done - here is my 2 cents.  Why don't you close out all your trades, and take a break for a week, and see how you feel? If you have to trade, do it on a virtual one for a while?
 

rated:
anusha123 said:   
SpeedingLunatic said:   I've never been eligible for something like that, so I'd like to learn more. Is it legal/permitted to hedge those holdings in another account? e.g. Buy at a discount in company account and hold for the hold period, while holding a short position (either short the stock, or via options) in another account? I could see the fees/borrowing costs and such eating up a few %, but on a 15% discount I'd think there is enough room.
  I think its called as "Insider trading" if your transaction falls under the black out period of your company's restricted period.
Generally you should not do that


1. You should review your company rules. For my company, you had to be in a senior position or in some certain departments (e.g. finance) to be classified as insider.
2. Selling options doesn't work in your case since options can be exercised at any time. Sure you could buy puts to protect your position (subject to comment #1).

rated:
FWjunkie2 said:   
jd2010 said:   If you're a shareholder of CZR then you are on the hook for debt just as much as any other owner, dilution or not.  Assets - Liabilities = shareholder equity ... dilution just shifts liabilities to shareholder equity, it doesnt magically break the equilibrium of what a company is worth.

If the people trying to dilute only own 10% of the shares then a dilution vote would have no chance of passing.

Not to mention CZR is just a shell holding company of other caesar's companies, it has minimal operating expenses and headcount. It doesn't need to dilute to keep the lights on.


PS - If you're confident in this you should short it with your entire life's savings, as it should be trading at 80 cents a share according to your hypothesis that they are going to issue 1000% new shares.  But since its up 40% since November, I doubt you are smarter than everyone else in the world.

  I accept all the points you made.
But I don't understand how does a company wipes out old shares and issue totally new shares when coming out of bankruptcy (as we have all witnessed with many bankruptcy settlements with creditors)  if you suggest it takes a "vote" to dilute or issue new shares.  When a company issues new shares for whatever reason, as a shareholder I've never received a proxy asking to vote for or against the issuing of new shares. Likewise, the company never asks for a vote to buyback shares.  The board decides that regardless of shareholders opinions.  Yes, we get to vote for the kings and queens of the board, but as shareholders we are just pawns.

I'm not saying the shorts will win or not, but apparently there is about 24% of shares used for short position currently.  So, either a big short squeeze is coming, or a significant number of shares short will be right.

JD2010,
Did you read that Moody report?  They refer to Caesars Entertainment Corp as "CEC" in their report, but the stock symbol is obviously "CZR".  They specifically state "CEC" ( aka CZR_) is at risk for this bankruptcy agreement, which is coming out this week.  The key sentence is: " ...includes provisions to resolve all related litigation among the major creditor constituencies, CEC (aka. CZR) and related parties."

https://www.moodys.com/research/Moodys-upgrades-Caesars-Entertainment-Resorts-and-Caesars-Growth-Properties-to--PR_361319?WT.mc_id=AM~UmV1dGVyc05ld3NfU0JfUmF0aW5nIE5ld3NfQWxs~20170130_PR_361319 

I found this article too... gee, 10x dilution may be underestimating... this report is closer to 20X dilution.
https://www.fool.com/investing/2017/01/04/why-caesars-entertainment-corps-share-plunged-13-i.aspx 

 

  SEC filing shows mgmt is going to give 1.625 shares of CZR for every share of CACQ.  There are about 140million shares of CACQ, so that is about 227 million shares of CZR needed to cover that issuance.  CZR currently has about 150 million common shares.  
Here is the SEC filing:
http://stocknewsflow.com/858339_000119312517049256_0001193125-17... 

Impressed that the share price of CZR is holding up at $9.10/sh on this news.  Not sure, but it sounds like creditors are getting these shares.  Not that many new shares but still something interesting to watch.

rated:
FWjunkie2 said:   
FWjunkie2 said:   
jd2010 said:   If you're a shareholder of CZR then you are on the hook for debt just as much as any other owner, dilution or not.  Assets - Liabilities = shareholder equity ... dilution just shifts liabilities to shareholder equity, it doesnt magically break the equilibrium of what a company is worth.

If the people trying to dilute only own 10% of the shares then a dilution vote would have no chance of passing.

Not to mention CZR is just a shell holding company of other caesar's companies, it has minimal operating expenses and headcount. It doesn't need to dilute to keep the lights on.


PS - If you're confident in this you should short it with your entire life's savings, as it should be trading at 80 cents a share according to your hypothesis that they are going to issue 1000% new shares.  But since its up 40% since November, I doubt you are smarter than everyone else in the world.

  I accept all the points you made.
But I don't understand how does a company wipes out old shares and issue totally new shares when coming out of bankruptcy (as we have all witnessed with many bankruptcy settlements with creditors)  if you suggest it takes a "vote" to dilute or issue new shares.  When a company issues new shares for whatever reason, as a shareholder I've never received a proxy asking to vote for or against the issuing of new shares. Likewise, the company never asks for a vote to buyback shares.  The board decides that regardless of shareholders opinions.  Yes, we get to vote for the kings and queens of the board, but as shareholders we are just pawns.

I'm not saying the shorts will win or not, but apparently there is about 24% of shares used for short position currently.  So, either a big short squeeze is coming, or a significant number of shares short will be right.

JD2010,
Did you read that Moody report?  They refer to Caesars Entertainment Corp as "CEC" in their report, but the stock symbol is obviously "CZR".  They specifically state "CEC" ( aka CZR_) is at risk for this bankruptcy agreement, which is coming out this week.  The key sentence is: " ...includes provisions to resolve all related litigation among the major creditor constituencies, CEC (aka. CZR) and related parties."

https://www.moodys.com/research/Moodys-upgrades-Caesars-Entertainment-Resorts-and-Caesars-Growth-Properties-to--PR_361319?WT.mc_id=AM~UmV1dGVyc05ld3NfU0JfUmF0aW5nIE5ld3NfQWxs~20170130_PR_361319 

I found this article too... gee, 10x dilution may be underestimating... this report is closer to 20X dilution.
https://www.fool.com/investing/2017/01/04/why-caesars-entertainment-corps-share-plunged-13-i.aspx 

 

  SEC filing shows mgmt is going to give 1.625 shares of CZR for every share of CACQ.  There are about 140million shares of CACQ, so that is about 227 million shares of CZR needed to cover that issuance.  CZR currently has about 150 million common shares.  
Here is the SEC filing:
http://stocknewsflow.com/858339_000119312517049256_0001193125-17... 

Impressed that the share price of CZR is holding up at $9.10/sh on this news.  Not sure, but it sounds like creditors are getting these shares.  Not that many new shares but still something interesting to watch.

Oh that SEC filing also explains that more than $1.2billion in additional debt with be issued.  It sounds like it will also fall into the books of CZR, but not sure.  That money sounds like will go to creditors too.  
 

  

rated:
srns said:   
rtlguru said:   
DavidScubadiver said:   Risk tolerance is about ability willlingness and need. What was your goal and what is your goal now? It there is no need to take outsized risks because you are at your goal, the gamblin/market time ought to stop. Better to have than to have and lose. Thanks for sharing. (You have the willingness component in spades but are out of balance here). I don't think you have the ability to take risk if you have to borrow from your folks to make investments in bad times, so that's another thing to consider. 
  Just to add some color to the money i borrowed from my parents. I basically convinced my parents to sell their house because I felt the housing market was a bubble and they didn't like their house anyway. I took the money from the sale and told them I would invest it for them and buy them a better house once markets dropped.

We were poor immigrants who came with 10k in cash to our name. My dad almost filed for bankruptcy in 1998 but through some good fortune, made enough to buy a modest house and save some money. I definitely have a scarcity mentality. I think what I have isn't enough and I need more. Yes, I know it's irrational, but when you grow up worried about being broke, that trauma stays with you even when circumstances change.

I used to think 1 MM was enough, then 3MM, then 5MM, and now my goal is 10 MM. This is how I know I have a gambling problem. Instead of thinking, "I have enough. I can invest long term and live comfortably", I think, wow. I went from 500k to 5 MM in a year. That means I could go from 5 MM to 50MM this year! How great would that be. Trading is basically like a drug to me now. I need more and more profits to get the same "high". Buying options is the hit of cocaine. 

I've been going to therapy for 5 weeks now and I've managed to keep my "bets" to 10% of my total portfolio so far. The irony is, if I traded this year like I did last year, I would probably be well over 8MM right now

 

  
Interesting..

Does RTL in your name mean Resistor Transistor Logic, or more likely Register Transfer Level? You are a smart EE, and took up this as a challenge? If so, awesome! 

Easier said than done - here is my 2 cents.  Why don't you close out all your trades, and take a break for a week, and see how you feel? If you have to trade, do it on a virtual one for a while?

  
No, just your typical finance guy. 

Thanks for the advice. Imagine trading for years, almost every day. You regularly swing 100-200k a day, You've had 700k days. Imagine what an endorphin rush you get. Now, try to just stop! it's like telling a cokehead who is snorting 1k of cocaine a day to just stop for a week and see how he feels

That said, the therapy seems to be working. Also, going through the process of writing my story seems to have helped me see how stupid I was and to play it safer. I sold 2/3 of my positions on friday and all of my options. It is very rare for me to not roll over at least some of my weekly options. I still have my long term holdings of GILD and M stock. I did buy back some GILD calls on the dip to 69 yesterday. 

rated:
rtlguru said:   
srns said:   
rtlguru said:   
DavidScubadiver said:   Risk tolerance is about ability willlingness and need. What was your goal and what is your goal now? It there is no need to take outsized risks because you are at your goal, the gamblin/market time ought to stop. Better to have than to have and lose. Thanks for sharing. (You have the willingness component in spades but are out of balance here). I don't think you have the ability to take risk if you have to borrow from your folks to make investments in bad times, so that's another thing to consider. 
  Just to add some color to the money i borrowed from my parents. I basically convinced my parents to sell their house because I felt the housing market was a bubble and they didn't like their house anyway. I took the money from the sale and told them I would invest it for them and buy them a better house once markets dropped.

We were poor immigrants who came with 10k in cash to our name. My dad almost filed for bankruptcy in 1998 but through some good fortune, made enough to buy a modest house and save some money. I definitely have a scarcity mentality. I think what I have isn't enough and I need more. Yes, I know it's irrational, but when you grow up worried about being broke, that trauma stays with you even when circumstances change.

I used to think 1 MM was enough, then 3MM, then 5MM, and now my goal is 10 MM. This is how I know I have a gambling problem. Instead of thinking, "I have enough. I can invest long term and live comfortably", I think, wow. I went from 500k to 5 MM in a year. That means I could go from 5 MM to 50MM this year! How great would that be. Trading is basically like a drug to me now. I need more and more profits to get the same "high". Buying options is the hit of cocaine. 

I've been going to therapy for 5 weeks now and I've managed to keep my "bets" to 10% of my total portfolio so far. The irony is, if I traded this year like I did last year, I would probably be well over 8MM right now

 

  
Interesting..

Does RTL in your name mean Resistor Transistor Logic, or more likely Register Transfer Level? You are a smart EE, and took up this as a challenge? If so, awesome! 

Easier said than done - here is my 2 cents.  Why don't you close out all your trades, and take a break for a week, and see how you feel? If you have to trade, do it on a virtual one for a while?

  
No, just your typical finance guy. 

Thanks for the advice. Imagine trading for years, almost every day. You regularly swing 100-200k a day, You've had 700k days. Imagine what an endorphin rush you get. Now, try to just stop! it's like telling a cokehead who is snorting 1k of cocaine a day to just stop for a week and see how he feels

That said, the therapy seems to be working. Also, going through the process of writing my story seems to have helped me see how stupid I was and to play it safer. I sold 2/3 of my positions on friday and all of my options. It is very rare for me to not roll over at least some of my weekly options. I still have my long term holdings of GILD and M stock. I did buy back some GILD calls on the dip to 69 yesterday.

  
I always thought you were in circuit design since the first time I read your post long, long time back..

Hahahaha.. You are a funny guy, and a practical one... I mean no disrespect at all. I'm sure you will come out of it soon.

I'm no way near your level. But, I trade everyday along with my day job. It's kind of a challenge for me to beat the market and all my friends that have finance advisers. Also keeps me sharp because of the reseach/reading etc (I'm not in finance field). But, my hard limit is, once I can make up my projected monthly expenses (annualized), I want go easy.. As you say, it's never easy to just stop or slow down!

 

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