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  • Why I Will Frequently Trade But Never Invest In Ford And GM  [View article]
    I'm 'old' too, so I understand your insights on the past, and concerns for the future. I've been on SS for a number of years (and intend to remain there, for a number more).

    I kind of like F, though. Here we have a stock selling at maybe 7X forward earnings (probably won't go a whole lot lower than that). *very* conservative management (they skipped the expected dividend increase this year, to improve 'sustainability' of the dividend in a downturn).

    Current income is my main concern. With F's 5+% dividend, and another 8% very possible by selling out of the money calls against my position, I just can't find the motivation to exit this 13% per year income provider. Mostly, I can't find a better alternative.

    I mean, F's going to be here, for the rest of our lifetimes, and then some. How much further out do we really have to look?
    Feb 10, 2016. 05:07 PM | Likes Like |Link to Comment
  • Recent Buy: Ford Motor Company  [View article]
    I keep hearing about the 25¢ special dividend, but F says it's only 15¢. What's the disconnect, here? Where did the 25¢ come from, if not from F?
    Feb 10, 2016. 04:21 PM | Likes Like |Link to Comment
  • Ford: Firing On All Cylinders  [View article]
    I earned 1% *per month* in the first of the money market funds (mid '70s), so yes, I've been there. They had a $10.00 price back then, BTW. The $1 came later.

    If I could earn that 18%+ again, you can be sure I'd be doing exactly that.

    But, we're not, so I can't. Unfortunately, I can't pay my bills with memories. Today, 5% is more than twice 30 year Treasuries. I think I'll take that, until something better comes along (with sustainability equal to that of F).
    Feb 10, 2016. 11:14 AM | Likes Like |Link to Comment
  • Ford: We Are Liking This Trade  [View article]
    As you approach the end of the call's life, if it's in the money, and the stock goes ex-div, you'll almost certainly be called hours before the ex-div date begins. The premium on the call is less than the dividend, at that point.

    The only answer here, is to buy the call back in yourself, a couple of days before that.
    Feb 9, 2016. 10:32 AM | Likes Like |Link to Comment
  • Ford: We Are Liking This Trade  [View article]
    Wait a minute here, on that return (on $11.50).

    For each of those puts sold, you have to leave another $1,150 idle in your account, earning zero interest. That means that instead of $11.50, you're putting up twice that ($11.50 for the stock, another $11.50 per put sold).

    So your $3.84 needs to be divided by $23.00, not $11.50.

    To my mind, that's 17%. You can do as well (and avoid most of the in-and-out transaction costs) just selling covered calls, one year out.
    Feb 9, 2016. 10:26 AM | Likes Like |Link to Comment
  • Ford: We Are Liking This Trade  [View article]
    It's worse than that. If you sell puts, you have to leave cash in your account (earning zero interest) for the full exposure to the put (what you'll eventually have to pay). Just buy the stock, and write the calls.
    Feb 8, 2016. 09:58 AM | Likes Like |Link to Comment
  • Ford: We Are Liking This Trade  [View article]
    Well, if it's gambling, by selling calls, you're taking the 'house' position. You lock in your profits up front. The gambler is the buyer of the call. He can lose it all (and, usually does).
    Feb 8, 2016. 09:55 AM | Likes Like |Link to Comment
  • Ford: We Are Liking This Trade  [View article]
    The commissions from monthly 'rinse and repeat' call and put transactions will be prohibitive, for all but the largest positions. I'd suggest (and I've done) a simple buy-write using the Jan 12.75s.

    Buy 1,000 F @ $11.50, sell 10 Jan 12.75s at 75¢. Earn 5% from dividends, another 6.5% from the call premium, allow yourself to be called in Jan at a $1.25 profit (yet another 10.8%). So you're well over 20% here, round trip commissions about $100 or so.

    If you sell puts, you'll have to have cash idle in your account, equal to the amount needed if you're exercised. Why not use it to double-down and the buy-write described above?

    I'm not thrilled about buying stock that's falling (selling puts). That just goes against the grain. When I deal with options, it's with a stock I'm bullish on. Old habits, I guess :-)
    Feb 7, 2016. 01:47 PM | 2 Likes Like |Link to Comment
  • Ford: Firing On All Cylinders  [View article]
    I dunno. I can't live off the federal funds rate, but I can live very nicely off a 5% dividend yield on invested funds. I guess it depends on what you're trying to do (I'm trying to pay bills).

    If fed funds move up, then the sp of F will drop. Which is okay with me, I wasn't intending to sell, ever. The calls I sold will expire more readily, which I like.
    Feb 7, 2016. 10:32 AM | Likes Like |Link to Comment
  • Ford: Firing On All Cylinders  [View article]
    All those traders trying earn a fraction of a cent today, are computers. Look at the floor of the NYSE today, during market hours. No one is there, and the few that are, are just hanging around, doing nothing.

    You sure didn't see that fifty years ago. The floor was chaos, then.
    Feb 6, 2016. 10:40 AM | Likes Like |Link to Comment
  • Ford: Firing On All Cylinders  [View article]
    To me, F is fundamentally sound, with a conservative dividend policy (mostly due the the Ford family, but that's okay with me). F's whole idea was a 'sustainable' dividend, good times or not.

    I'm thinking it will pay 5% forever (based on today's prices). Any extra income you can earn from selling calls against F is just lagniappe.

    But the lagniappe is more than the dividend, itself. That make me take notice, and I have.
    Feb 5, 2016. 09:48 AM | Likes Like |Link to Comment
  • Another Dividend Aristocrat Beating The Market, With Estimates Rising, Reports This Week  [View article]
    Yep, 'humble; wins every time, on Wall Street, don't you think? Or do you know better than that? Is anyone who brags about their wealth 'humble'?
    Feb 2, 2016. 08:15 AM | Likes Like |Link to Comment
  • Another Dividend Aristocrat Beating The Market, With Estimates Rising, Reports This Week  [View article]
    Re: covered calls. I think the real question here, is why waste time trying to find problems, with a strategy you don't understand, in the first place?

    No one who doesn't comprehend selling options, is in a position intelligently to find fault with this time-proven technique of improving yield. It works, with or without you.

    Being 'underwater' actually works quite well, for an covered call seller. We'd actually prefer that. But to see why, takes a bit of understanding.

    Being young, and having $3MM is great. Until you find out that it could have been $4MM, had you taken the time to learn just a little bit more.
    Feb 1, 2016. 02:48 PM | Likes Like |Link to Comment
  • Ford: Firing On All Cylinders  [View article]
    Take a look at a buy-write on F, maybe to Jan 2017. Looks to me like you can get not only the dividend, but more than that much again for the $12.75 calls (80¢). Not too shabby for what looks like an option that will expire worthless to the buyer, anyway.

    Worst case, you're called at a 75¢ short-term capital gain. I'll take that.
    Jan 31, 2016. 10:14 AM | Likes Like |Link to Comment
  • Is It Really Time To Cover A Potash Short?  [View article]
    The long term price trend is meaningless, unless you're going to assume that, somehow, long term conditions will magically replicate. They won't, both supply and demand have changed forever, and aren't somehow bound to 'return' to where they used to be.

    Not even the recent past offers much guidance, in rapidly changing markets.

    Hey, not that long ago, X sold for $180, too. I don't think I'd want to use that as a guide :-)
    Jan 31, 2016. 08:42 AM | 9 Likes Like |Link to Comment
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