Seriously, this conversation is degrading beyond understanding. My point is your estimations are way too high. If anything "can't happen" it is 70 million iphones getting sold in China this year or next at anywhere near the margins currently enjoyed by Apple.You can believe all you want about fakes either way, its' only part of the issue. what matters is the actual sales
Between Nokia And Research In Motion, RIM Is The Safer Play [View article]
Luke you bring up some very valid points.
Your statement "Nokia has a turnaround plan - a very aggressive go-for-broke plan..." Kinda makes my point for me about relative risk. Is Nokia going to go under? I don't know and I doubt anyone who does is talking, but relative risk I lean towards RIMM as safer money.
NOK may very well make more sense for capital allocated in riskier and maybe higher return stocks.
Hi Jeb, Thanks for the kind words. It's ok that you disagree and I thought the same of Weezy's name.
Anyway, I added that I lived in Japan for a couple of years and I understand the culture differences. it's not about that though and that is why I didn't bring the issue up. The point was that it's not realistic to believe 70 million sales are going to happen this or next year. "Miyagi san" is over estimating.
I know a lot of people don't like it when the punch bowl gets taken away and I have written enough to be ok with it. Not reflective of you, but just because more comments disagree than agree don't make them correct. I stand on my record of calling the "China situation" as I see it and my record speaks for itself for those who will actually take the time to figure out if I know what I am talking about or not.
I can't recall ever asking someone what their gender is or even thinking about it. It doesn't make any difference to me in the slightest and now that you bring it up it still doesn't.
Perhaps it's my computer, but I don't see a bio for Weezy and as stated its the first article. If a history was not important enough for someone to post it's not important enough for me to "investigate" it.
All of this is nothing more than a distraction anyway. My opinion is based on my understanding. Weezy could be a native business owner in China and I would listen, but I would not change my position. I also work with numbers all day in odds calculations so I am extreme about not having "sample bias".
Also I don't have an axe to grind with China. In fact my office walls are filled with Chinese related items including many pictures.
I just would not count on 70 million iphones being sold this year or next or anywhere near that number relative. As we all seem to agree, China is not the same as the US. In the end expect Chinese brands to make significant inroads into the upper end of smartphones cutting into Apples ability to monetize like they have elsewhere.
This is not an all or nothing sort of thing, but yes on a relative basis this is part of the problem.
Just because a store is a "Apple store" doesn't mean there won't be knock-offs sold. It appears naive to believe an "apple" store will never be found to be selling fakes. I don't "know" it will happen, but given my understanding I would be surprised to read about it at some point.
Firstly let me say thank you for reading my article and for taking the time to comment. I respect and appreciate your thoughts as well as the dignified manner in which you present them here.
We don't share the same opinion on what the Chinese people will or will not "settle for", but that is ok. As you put it so well "It is important to understand opposing views".
What appears to get lost in some of the discussion by some is that it is not an all or nothing type of thing. Apple in China is not binary and we will all likely agree Apple will have a large relative success. Where you and I start to part in our analysis of China is how much success Apple will have and for how long. Many successful world stage companies have come into China with guns a-blasting only to find it's a lot tougher than it first appears to compete.
I am not bearish on Apple either and this is not meant to be an Apple bashing article.
Yes Rolex and Ferrari among other brands have found success, but iPhones may be hot at the moment but there are closer alternative brands in China than many of the luxury brands cited (not that they have had a totally easy ride either).
Thanks for reading my article and taking the time to comment.
I do not know what percentage of product that is fake is sold to citizens vs. visitors, but I am pretty sure in places where I am the only non Asian for 50 miles it is NOT Americans buying the products at the local stores.
I will agree there is going to be plenty of vendors looking to sell all sorts of products to "white devils" but my article is beyond that. Try going into a music store and buying a Fender or Gibson guitar in China and see how easy it is to buy a real one.
As far as iPhones go, you can't tell a real one from a fake one without opening it up. So how do you know the display models are not real and the one they give the customer is not fake? For having traveled 53 times I get the impression you have not gone far from the Intercontinental or Hyatt in Shanghai. Even my eight year old son can count to 100 in Chinese (something he has been able to do for about three years now). Can you?
Thanks for your comment and kind words. You can add me to the list of people who have spent a significant time in the orient. I have lived in Japan and I have been to just about every major city in China many times.
Many stores will not carry American products because customers will not buy them fearing it could be a fake. I will agree that many can discern from fakes, especially if "really bad", but most are not very bad and often their simply isn't a choice (take the DVDs for example).
I have done business for years in China and have an understanding of the environment better than probably most. Even so, the history of "fakes" in China is so well documented and so much has been written about it that a trip there is not needed to know what the playing field is like.
Between Nokia And Research In Motion, RIM Is The Safer Play [View article]
Writing covered calls has the same risk of for the writer as puts do, this is true. BUT the risk of writing a call is greater than a put.
Put yourself in the other person's shoes. Buying a call can reward you more than a put can "potentially" so the the price is higher all else being equal.
Yes, if you're trading in SPY for example you are not going to care about the spreads in any near month at any near strike because of the huge liquidity. It's when you move to less liquid options that calls and puts stretch the parity to the max and the spreads matter.
Off the top of my head I don't know a way around the currency risk without a hedge. IB allows you to make a market so you shouldn't have a spread to deal with but of course now you're adding another leg to what could otherwise be a simple transaction.
Margin rates at IB are pretty cheap so you may still be better off paying margin and going with the covered call. Worth looking into if you doing a lot. Otherwise I would just keep it simple and focus on higher priced stocks given a choice of more than one.
Right, like I added this is NOT to be confused with call-put parity which means the pricing will be relative.
There are several factors at play here and I will not go into all of them here but will paint a broad picture of what is happening.
Let's start with a given put option with a strike of $15. We will add some other givens to keep it simple. The expiration is the front month and the stock is at $15 right now. If you buy the put the MOST you can make is $15 less the cost of the put. So we will say for easy math sake that you can make $15
If you take the $15 call on the other hand you quickly will see the profit potential is greater than $15 because the stock can go to $30.01 and higher. This means there is greater risk selling a call than selling a put. greater risk = greater price all else being equal.
What will likely also make sense is that as a stock moves higher in price the difference progressively gets smaller.
One other important point is if you generally pay the spread (buy the asking price and sell the bid price) calls also usually make more sense all else being equal. This is because calls generally have greater liquidity and the spreads are lower. So always start out looking at calls and then after you have a frame of reference move to the puts and see how they are pricing out. You may find you can save a lot of money this way.
I write about these things and other option related topics every week in the Rocco Pendola Options Newsletter. If anyone is interested please check it out. http://bit.ly/wbmj9l
Why Apple May Not Dominate China [View article]
http://bit.ly/IkIwWC
Seriously, this conversation is degrading beyond understanding. My point is your estimations are way too high. If anything "can't happen" it is 70 million iphones getting sold in China this year or next at anywhere near the margins currently enjoyed by Apple.You can believe all you want about fakes either way, its' only part of the issue. what matters is the actual sales
Between Nokia And Research In Motion, RIM Is The Safer Play [View article]
Your statement "Nokia has a turnaround plan - a very aggressive go-for-broke plan..." Kinda makes my point for me about relative risk. Is Nokia going to go under? I don't know and I doubt anyone who does is talking, but relative risk I lean towards RIMM as safer money.
NOK may very well make more sense for capital allocated in riskier and maybe higher return stocks.
Why Apple May Not Dominate China [View article]
Anyway, I added that I lived in Japan for a couple of years and I understand the culture differences. it's not about that though and that is why I didn't bring the issue up. The point was that it's not realistic to believe 70 million sales are going to happen this or next year. "Miyagi san" is over estimating.
I know a lot of people don't like it when the punch bowl gets taken away and I have written enough to be ok with it. Not reflective of you, but just because more comments disagree than agree don't make them correct. I stand on my record of calling the "China situation" as I see it and my record speaks for itself for those who will actually take the time to figure out if I know what I am talking about or not.
Why Apple May Not Dominate China [View article]
Ok, I guess "it can't happen" good luck with that.
Why Apple May Not Dominate China [View article]
Thank you. You obviously get it. I don't dispute the culture part of Miyagi's article at all, only how much potential can be expected right now.
Why Apple May Not Dominate China [View article]
Perhaps it's my computer, but I don't see a bio for Weezy and as stated its the first article. If a history was not important enough for someone to post it's not important enough for me to "investigate" it.
All of this is nothing more than a distraction anyway. My opinion is based on my understanding. Weezy could be a native business owner in China and I would listen, but I would not change my position. I also work with numbers all day in odds calculations so I am extreme about not having "sample bias".
Also I don't have an axe to grind with China. In fact my office walls are filled with Chinese related items including many pictures.
I just would not count on 70 million iphones being sold this year or next or anywhere near that number relative. As we all seem to agree, China is not the same as the US. In the end expect Chinese brands to make significant inroads into the upper end of smartphones cutting into Apples ability to monetize like they have elsewhere.
Why Apple May Not Dominate China [View article]
Just because a store is a "Apple store" doesn't mean there won't be knock-offs sold. It appears naive to believe an "apple" store will never be found to be selling fakes. I don't "know" it will happen, but given my understanding I would be surprised to read about it at some point.
Why Apple May Not Dominate China [View article]
Firstly let me say thank you for reading my article and for taking the time to comment. I respect and appreciate your thoughts as well as the dignified manner in which you present them here.
We don't share the same opinion on what the Chinese people will or will not "settle for", but that is ok. As you put it so well "It is important to understand opposing views".
What appears to get lost in some of the discussion by some is that it is not an all or nothing type of thing. Apple in China is not binary and we will all likely agree Apple will have a large relative success. Where you and I start to part in our analysis of China is how much success Apple will have and for how long. Many successful world stage companies have come into China with guns a-blasting only to find it's a lot tougher than it first appears to compete.
I am not bearish on Apple either and this is not meant to be an Apple bashing article.
Yes Rolex and Ferrari among other brands have found success, but iPhones may be hot at the moment but there are closer alternative brands in China than many of the luxury brands cited (not that they have had a totally easy ride either).
Again, thank you
Why Apple May Not Dominate China [View article]
Thanks for reading my article and taking the time to comment.
I do not know what percentage of product that is fake is sold to citizens vs. visitors, but I am pretty sure in places where I am the only non Asian for 50 miles it is NOT Americans buying the products at the local stores.
I will agree there is going to be plenty of vendors looking to sell all sorts of products to "white devils" but my article is beyond that. Try going into a music store and buying a Fender or Gibson guitar in China and see how easy it is to buy a real one.
As far as iPhones go, you can't tell a real one from a fake one without opening it up. So how do you know the display models are not real and the one they give the customer is not fake? For having traveled 53 times I get the impression you have not gone far from the Intercontinental or Hyatt in Shanghai. Even my eight year old son can count to 100 in Chinese (something he has been able to do for about three years now). Can you?
Why Apple May Not Dominate China [View article]
Why Apple May Not Dominate China [View article]
Many stores will not carry American products because customers will not buy them fearing it could be a fake. I will agree that many can discern from fakes, especially if "really bad", but most are not very bad and often their simply isn't a choice (take the DVDs for example).
I have done business for years in China and have an understanding of the environment better than probably most. Even so, the history of "fakes" in China is so well documented and so much has been written about it that a trip there is not needed to know what the playing field is like.
Big Technology Reporting Earnings Tuesday [View article]
I like your comment and agree
Netflix Needs To Change The Plan Or Change The Leadership [View article]
Between Nokia And Research In Motion, RIM Is The Safer Play [View article]
Put yourself in the other person's shoes. Buying a call can reward you more than a put can "potentially" so the the price is higher all else being equal.
Yes, if you're trading in SPY for example you are not going to care about the spreads in any near month at any near strike because of the huge liquidity. It's when you move to less liquid options that calls and puts stretch the parity to the max and the spreads matter.
Off the top of my head I don't know a way around the currency risk without a hedge. IB allows you to make a market so you shouldn't have a spread to deal with but of course now you're adding another leg to what could otherwise be a simple transaction.
Margin rates at IB are pretty cheap so you may still be better off paying margin and going with the covered call. Worth looking into if you doing a lot. Otherwise I would just keep it simple and focus on higher priced stocks given a choice of more than one.
Between Nokia And Research In Motion, RIM Is The Safer Play [View article]
Hello Slick,
Right, like I added this is NOT to be confused with call-put parity which means the pricing will be relative.
There are several factors at play here and I will not go into all of them here but will paint a broad picture of what is happening.
Let's start with a given put option with a strike of $15. We will add some other givens to keep it simple. The expiration is the front month and the stock is at $15 right now.
If you buy the put the MOST you can make is $15 less the cost of the put. So we will say for easy math sake that you can make $15
If you take the $15 call on the other hand you quickly will see the profit potential is greater than $15 because the stock can go to $30.01 and higher. This means there is greater risk selling a call than selling a put. greater risk = greater price all else being equal.
What will likely also make sense is that as a stock moves higher in price the difference progressively gets smaller.
One other important point is if you generally pay the spread (buy the asking price and sell the bid price) calls also usually make more sense all else being equal. This is because calls generally have greater liquidity and the spreads are lower. So always start out looking at calls and then after you have a frame of reference move to the puts and see how they are pricing out. You may find you can save a lot of money this way.
I write about these things and other option related topics every week in the Rocco Pendola Options Newsletter. If anyone is interested please check it out.
http://bit.ly/wbmj9l