February 23, 2012

Rolling Forward Call Options

Rolling Forward Call Options

There is a stock option technique used in some situations that can allow you to buy more time when call options you own are going to expire called rolling forward.  The other day, I happened to engage in this practice when reviewing the funds held in a trust account for my retirement over which I am the beneficiary.  I thought it might be useful to explain what I did and the reasons behind my actions. Please note: I would never under any condition recommend the positions I'm about to … [Read more...]

One Very, Very Good Thing About the Financial Reform Bill That Just Passed Congress

Derivatives Trading Office

I don't care what anyone tells you, I want you to listen to me very, very carefully: Although I cannot give an opinion on the financial reform act that just passed Congress because I haven't read it yet, I can say that the provision that requires all derivatives other than those used for "commercial purposes" to be traded on a regulated exchange is absolutely, positively, 100% required if we have any hope of avoiding a collapse like we had following the failure of Lehman Brothers. I realize, … [Read more...]

Put On Your Cowboy Hat Because We Just Took a Position in British Petroleum (BP) Stock Options

Most of you are aware of the natural disaster unfolding in the Northern Hemisphere thanks to a massive oil spill from an out-of-control well owned by British Petroleum. Wanting to find a way to take advantage of what is clearly a terrible situation, I spent the morning studying the BP mess in the Gulf of Mexico.  (As Buffett says, there are always intelligent things to do regardless of what is going on in the world.) Turns out, the stock actually looks cheap other than the fact no one … [Read more...]

Family Member Speculating on Citigroup Stock Options

Citigroup Stock Certificate

Some time ago, a family member of mine decided to take a tiny portion of his speculation portfolio and trade stock options on Citigroup.  This wasn't his investment capital, he was fully aware it could totally and completely blow up, but thought it would be interesting and great entertainment, plus he figured that he was right.  With the rest of his "financial house" in order, so to speak, and conservatively managed, it provided far more enjoyment for him than, say, a cruise or blowing the … [Read more...]