Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mr.Gogo who wrote (50620)	1/20/2013 10:26:33 PM
From: Dennis 3	1 Recommendation Respond to of 78751

Might be a good idea to start a options thread for value investors. I sure a lot of people from here would join.

To: Mr.Gogo who wrote (50620)	1/21/2013 12:12:27 AM
From: Paul Senior	7 Recommendations Read Replies (1) \| Respond to of 78751

Options. Just because a tool exists, doesn't mean it should be in a tool box and used. I ask myself would Ben Graham use options? Maybe. Would he suggest value investors have options as part of their tool kit? I doubt it. Options are time-related and often complex. They require a skill set different from finding and buying value stocks. This is not a thread where people can buy stocks and talk about how they augment their holdings with options on those stocks. This is not a thread for poorly funded value investors who feel they have to use the leverage of options to make the gains they want. This is not a thread for people who are trading options now because that is what is working, and value stocks (for them) are not working or not being found. This is not the thread for the church-of-whatever works. This is not a thread for people who use options instead of buying stocks, because they are afraid of making a commitment to stocks, afraid of volatility, or afraid of holding anything long-term other than cash/bonds. People post here they buy xyz stock and maybe feel they have to post on the stock's rise (or fall) or on company news. These are infrequent company posts. (Which is what we want -- infrequent -- because not all of us are interested in the same stocks) However, with options, we're generally talking short-term 30-60 days,and many ways to play the options. One option expires, another begins. And so if people are going to be talking about options, the number of option posts increase - and may predominate or dominate. Do you read Big Dog's thread, nominally and previously about oil/oil service companies? They have allowed options and now maybe 50% or more posts are about people's options plays. (on oil/airlines/whatever) To me, that thread is out-of-control and more or less useless for oil/oil service stocks. And maybe it's just the way posters want it - people seeming to make more money with their options activities than with buys/holds of oil/oil service companies. So be it. We've had 15 years of not much option discussion (specific options plays), and I'd like to keep it that way. So I encourage you guys who want to discuss value stocks with options or options with value stocks, to start such a thread. Or take it to one of the other threads which have a value bent and where option discussions are permitted, if not encouraged.

To: Mr.Gogo who wrote (50620)	1/21/2013 10:00:17 AM
From: Spekulatius	2 Recommendations Read Replies (1) \| Respond to of 78751

>>You can make a value investment by using options. Warren Buffet does it. And if Madharry has found a valuable way through options, why not. Its just a tool. Many times you say you are getting fills. This means you are putting purchase orders. Other people are selling put options with almost the same result...<< A limit order is not the same than writing a put. I can pull a limit order without cost, as long as it has not been executed. If I am short the put and want to exit the position , even before the strike price is hit, i need to buy back the put. If the market goes down, or volatility goes up, the put will go up in price, so this will cost me. This is a big difference between shorting a put and a GTC order. Another one is the higher friction cost (due to the higher bid/ask spread of the option). I agree with Paul that handling options requires a very different mind and skillset than value investments. I also agree that those threads that allow option talk have mostly deteriorated from my perspective, so it is better to keep the options angle out of this thread. Now I did think that the case that Madharry mentioned was interesting.