Robert,
>> Other than the fact that Alydaar is a good trading stock for you and that you have made a lot money doing so, what are the good points about Alydaar? There has got to be some. <<
Yes there are some good points... They use the automated factory approach which will be in huge demand once the flood gates opend, they have been able to get some attention with the big names they have mentioned in the news releases..... their alliance with compuware, allows clients to get a full solution.
>> Let's say I own 10,000 shares @14.00 per share and I sell at Friday's approx. Friday close of 18.5. I've made $45,000 right? WRONG. When you're in the maximum tax bracket like some here, Fed and State taxes will eat about 45% of that what looked liked $45,000 profit which only leaves $24,750. That doesn't look as good as it sounded. At
least not to me. To complicate things worse it's hard to find the exact high and low of any stock, especially when you factor in the tax situation I just described. Now in order to come out I would have to by the stock at below $16.475 before I could reenter and come out one dollar ahead. <<
I think you are looking at this the wrong way.
First lets say you bought a 1,000 shares of ALYD at $12.00 last year.
You held on to the stock for appox. 12 months and sold it at $32.00
That leaves you with a profit of $20,000 .. a 66% return.
I feel that during the last 7 month, (after ALYD dropped from $26.00) it could of been traded at least once per month for a 30% to 40% gain. each time. This is especially true from Nov. 21st 1997 until now.
ALYD has been range bound .. trading between $14 and $20
You can always make more money on range bound stocks by trading them, rather than holding long on them. If you play the moves right and use your profits to buy more stock or more options, you would have an exponential return.
Right now ALYD is stuck in this range and will not make a move until it can break over $19 5/8 and close above that mark. So far, it has backed off every time. The last time being 3/19 when it reached $19 3/8.
I traded ALYD in my IRA, so taxes were not an issue. However, once they got the options I have been trading them in my cash account.
I usually make between 100% to 300% trading the options.
If you buy 1,000 shares at $14.00 and then sell them at $17.00, you would make $3,000 on a initial $14,000 investment and a 21% return.
Now if you played the options when the stock was at $14.00
lets say you had 25 days until expiration and you bought that months $15.00 calls for $1.00 a contract.
If the stock made the same move, those options would be worth $2.00 or more a contract (depending on how long you had left until expiration)
that would be 100% return. So to make the same $3,000 profit, all you would have to invest would be $3,000 compared to $14,000 if you bought the stock.
I know it is a bit confusing, but it is worth learning about it.
If you don't want to trade your stock, the least you could do is to buy some puts when you think the stock is near its high.. So if you are protected on the down side. The same can be done with selling covered calls. (my personal favorite option strategy.)
When you sell a covered call that you don't have to buy back the whole damn amount you brought in is pure profit!
anyway, there are other methods to trading.. not just trading your stock. |
