For those who care…
Losses have slowed…Cash burn was LESS than expected…Volvo sale within months!!
And don’t worry…I WILL keep you updated on Ford.
After looking at the charts this morning, I’m putting in my order right now to short Ford at $5.65.
Mike
Did any of those charts tell you to buy the stock when it was $1.20???
Buy at $1.20, sell at $5.50 or higher…good plan. Short at $5.65, cover at what…maybe $5.00 at best. Eh, not such a profitable plan. And far more risk. Buying at $1.20 you can lose AT MOST $1.20 a share. Shorting at $5.65 unless you have a stop loss in place to limit your losses the risk is infinite. I’ll take my long positions over your short positions any day my friend.
MIke,
HOW MANY FORD SHARES DO YOU OWN???
and at what price???
I see all your comments, but NO ONE knows your actually position.
So…let’s hear it…
The last I heard you were just buying puts and calls trying to scalp a few bucks. If that is still your strategy…You left some BIG TIME money on the table.
FOUND IT!!!
Mike…December 8th 2008…"Sold my Ford shares at $3.49. Bought them at $2.10 in November. (OUCH!)
Man…that $2.10 looks like a bargain now.
Well…Now we know!!
I specifically warned Mike about doing this with Ford (see previous posts)…Trading this stock for short money is gonna cost you BIG MONEY at some point. How do you mentally overcome BUYING BACK a stock at $4.00 or $5.00 that you OWNED at $2.10??? What happens is… people WAIT…They wait for it to pull back to the price is was when they ORIGINALLY bought it. The only problem is…They usually never get that chance!! Instead…The stock moves to $7.00… Then they say…OK…If it just drops back to $4.00. This is a CLASSIC investment trap.
Don’t PLAY with this stock. BUY IT…Forget you own it…and IF it pulls back…JUST BUY MORE!!!
I’m a little guy who has 2500 shares at an average cost of $2.27 per share. I can’t complain about Ford so far. We’re in interesting times.
JP
I saw those purchases you made…
NICELY DONE!!
Now…the part that gets tricky is approaching…At some point the stock will probably pull back…TIMING that is like looking at scratch tickets BEFORE they’re scratched and trying to pick a winner. NOT GREAT ODDS. Any pull back is a BUYING OPPORTUNITY.
Watch the news on Ford…They’re gonna announce that VOLVO sale very soon…That might bring in a Billion maybe slightly more. What we’re looking for is ANY…ANY slow down in the rate of sales DECLINE.
Notice I didn’t say UP TICK in sales…That isn’t happening for a while…This stock WILL MOVE on any signs that sales have just stopped FALLING. cars are not luxury items…They are MUST HAVES…
People aren’t buying new ones because of the current economy.
That will only last so long…The PENT UP DEMAND being created for new car purchases will be EXACTLY equal to the rate of DECILNE the industry has seen.
Think about it…People are ALL seeing their cars AGE in this window of the recession. When they feel somewhat secure…And I mean secure in the WORST is probably over…They WILL return to the showrooms…And they’ll do it in numbers NEVER BEFORE SEEN. They LEFT the showrooms in never before seen numbers…That’s EXACTLY how they’ll come back!!!
HOLD THIS STOCK!!!
When car companies hit that POST RECESSIONARY cycle… THEY PRINT MONEY!!!
fdjake, question for you … and I’m asking to learn cause I’ve been following your posts and although I don’t invest in stocks yet, I’ve been telling my brother to study Ford based on what you’ve been posting.
And a few months ago, I sent him your following post:
[i][b]"Open your Scottrade account and have them send the paper work for an OPTIONS account. Once it’s open…Take what ever amount you decide and buy the Ford January 2010 $7.50 CALLS. They closed tonight at .98 REMEMBER THAT!!! On Sept. 9th. those options were 98 cents!!! You can write back in when they double over the next year. Then Thank me and we’ll all see where we stand.
What your buying is the RIGHT to buy Ford stock REGARDLESS of price, at $7.50/share all the way out till January 15th 2010. You can sell those options at ANYTIME up till january 15th 2010. As a matter of FACT, those EXACT options traded at $3.50 (almost 400% more) when Kirk made his $8.50/share offer!!! If you decide to blow them out in a few months or a year for a nice profit you can. But…You could LOSE too. This isn’t “playtime” here. It’s REAL MONEY and you will experience real results. Even if you DON’T invest…do me a HUGE favor and WATCH those option prices. Remember…You can LEARN without investing a DOLLAR."[/b][/i]
Now I’m sure you’re on the positive side in making money on this stock… but what happened to those options? They’re currently at $.70 right now… are you taking a loss on them?
Keep in mind, your broker might not let you do options. They failed to approve me for options on my Fidelity SEP-IRA. But invidual cases may vary from broker to broker. I’ll let Jake answer the specific Ford question.
That’s a great question…
Options give you the right to buy shares at a pre-determined price.
The options I have in Ford are good until Jan 2010. My intention is/was to exercise those options and just buy the stock. At this point in time we don’t know if the stock price will be above or below the strike price. I STILL hold those options and we’ll see where things are as we approach 2010. All totaled (including the options rights) I have just under 75,000 shares of this stock. My intention is to round that off to an even 100,000.
I have 1000 of those Ford options which equal 10,000 shares. It’s a small percentage of the total holdings.
At the time I purchased those options Ford was weeks away from announcing their first PROFIT in YEARS. The stock went to over $8/share and those options EXPLODED. At the time I looked at the options as an insurance policy that would allow me to buy 10,000 of Ford stock up till Jan 2010 at $7.50 regardless of where the stock was. (I thought it would be higher than $7.50 in Jan 2010, and it may be…it might not be too)
Then…Oil went to $147/barrel. In my opinion THAT event caused more damage to our economy than anything that went on in Wall St. That CRUSHED the consumer. That beating the consumers took didn’t FULLY show up until the fall. Then as we know, all hell broke loose. Those consumers who pulled back on spending DIRECTLY lead to MASSIVE layoffs as NO ONE bought anything but GAS. Those layoffs scared the crap out of Wall St. Remember…up until that point most economists thought we wouldn’t even HAVE a recession!!!
I still look at those options as an insurance policy. IF…and it’s and IF…Ford stock is HIGHER than $7.50 I get a price break on those shares. If it doesn’t look like that will happen as we approach the fall, I probably just sell the options. Obviously If Ford is $10/share by Sept. I’d rather have the 10,000 shares at $7.50 than whatever profts the options would bring.
I believe Ford is eventually a solid $30 or higher stock. That might take 5 years…But Mullaly is constructing a NEW Ford that has never existed in history. the OLD ford topped out at $39/share.
I would not be at all surprised to see any previous historical high in Ford stock broken.
That’s the game I’m playing…Long haul…Let it BUILD WEALTH. That is how you get RICH according to this guy…
http://www.businessinsider.com/jim-rogers-diversification-is-a-scam-2009-4
Before anyone says it…Theses are NOT…I repeat…NOT all my eggs. It’s a few “real estate flips” worth of eggs…that’s all.
Also…If you re-read some of my later posts you find that I mentioned just buying the STOCK instead of the options. This was because the stock price had fallen so much. If you can buy the STOCK at $2.00/share and you BELIEVE in the investment theory behind that purchase…WHY MESS WITH THE OPTIONS???
So…I hope that explained it a little clearer. This is not EASY…If your going to invest like this, you MUST know going in, you’ll probably be BUYING a chunk of your eventual total position at prices that are HIGHER than the eventual LOW. In the end it really doesn’t matter…If Ford is at $30/share 5 years from now…Would you be pissed off if your average holding cost was $4/share??? I know I wouldn’t.
Rich,
FWIW- I opened a Scottrade account with options trading capability. On the application where it asks for your investment goals/strategy regarding options, I checked off “Speculation”. Naked shorting options are very risky and checking “speculation” shows them that you are aware of that. I think that’s a major reason why the account was approved.
JP
I answered honestly on my trading experience and how many trades I have done recently (none) so I think they just looked at me like a rookie and didn’t do it for me. No worries, I’ll reapply later. My long positions are doing quite well so I’m happy regardless.
Ok now I have a question related to the car industry.
WHY is the Treasury dept. still giving money to GM???
I just read that they are “LENDING” them another 2 BILLION!!
Isn’t one of the definitions of insanity doing the same thing over and over, but expecting different results??
I guess just like a mortgage if GM goes belly up they can be hacked up and auctioned off to repay the debt. I guess the plan is make them do things more effectively and if that fails wholesale GM to the highest bigger, take the money back from the fire sale and move on.
If you’re going to trade options you’d better know your Greeks (hope it makes sense):
Delta
Estimates how much the theoretical value of option price will change when the price of the underlying stock changes by $1, assuming all other variables are unchanged.
When the delta is near 1 for Call or -1 for Put, the options will begin to trade like a stock, moving almost dollar for dollar with the stock price.
Long calls have positive delta; short calls have negative delta.
Long puts have negative delta; short puts have positive delta.
Long stock has positive delta; short stock has negative delta.
Gamma
Gamma estimates how much delta would change if the price of the underlying stock changes by $1. So, gamma can tell you how “stable” your delta is.
Both long calls and long puts always have positive gamma.
Both short calls and short puts always have negative gamma.
Stock has zero gamma because its delta is always 1.00 – it never changes.
Theta
Measure of the rate of decline of option’s time-value resulting from the passage of time (time decay). Theta provides an estimate of the dollar amount that an option price will lose each day due to the passage of time and there is no move in either the stock price or volatility.
Long calls and long puts always have negative theta.
Short calls and short puts always have positive theta.
Stock has zero theta – its value is not eroded by time.
Vega
Measures the sensitivity of an option’s price to changes in Volatility. Vega estimates how much an option price would change when volatility changes 1%.
Long calls and long puts both always have positive vega.
Short calls and short puts both always have negative vega.
Stock has zero vega – it’s value is not affected by volatility
Rho
Measure of the change in an option’s price due to a change in interest rate. Rho estimates how much the option’s price will change when interest rates changes by 1%
Long calls and short puts have positive rho.
Short calls and long puts have negative rho
Hope you’re still here but this only a very brief introduction to options (I would advise you to Google the Greeks and read about them before trading).
Greetz and happy investing Ray
P.S. Jake, I enjoy you’re posts very much, keep up the good work! Personaly I’ve promised myself to dedicate myself to RE and not trade the stock market any more for the moment (although it’s very tempting at this moment).