Beginner-ish options question

Gogar · 10-19-2014, 09:28 AM

Hey there fellas. And Ladies.

I own 500 shares of SVM, a stock that I don't see as very exciting in 2015. It's been a dud and whether it has an exciting future or not, I'm sort of mad at it. It currently trades at about $1.50.

I would keep it and just sell covered calls on it, but it's such a cheap stock that it's pretty worthless to sell 2-3 month calls on it. I would make like . . $30-40 in 3 months but I'd have to hold onto my 500 dud shares when I could just sell it and try something with a better chance at timely success.

Is it a reasonable strategy to sell some November $1 calls and make about $250, fully expecting them to get called away at expiration?

I guess it's part of a larger question about "options strategies for really inexpensive stocks."

What do you think?

Thanks a bunch

masraum · 10-19-2014, 10:17 AM

I had no idea I was publicly traded. I'm not seeing a cent of the money, and I think I'm worth way more than that.

Gogar · 10-19-2014, 11:40 AM

Don't worry, you've got lots of intrinsic value.

biosurfer1 · 10-19-2014, 01:43 PM

Doesnt sound like you have a ton invested and dont really care about the stock..I'd say its a perfect time to try some "riskier" options strategies. Maybe you'll hit the lottery

john70t · 10-20-2014, 04:52 AM

(Opinions of a nobody)
You make money when you buy. "Buy and hold" is what I've heard.

From a 5-yr chart Commodity and Metal Prices, Metal Price Charts - InvestmentMine, Gold and Silver bubble commodities spiked during the USD panic when the big holders made a killing off the floods off desperate unwashed masses wanting to get in where it was safe. Then commodities slowly corrected over time. That seems to the animal spirit.

Platinum and palladium are rare, found in China, and used in catalytic converters.
Cars aren't going away anytime soon.

Questions to ask:
Is there going to be another market correction?
And if, then how big? What is the most safe investment?
Is China going to expel all foreign companies and go hard core Maoist again?
What other companies are possible competitors?
Sell all or some? Diversify with a fund?

Gogar · 10-20-2014, 06:16 AM

Thanks, John! I wasn't really talking about a specific stock, though, I just used that as an example.

After some thought, I figured out the inherent flaw in my idea; it's not really a consideration anymore.

wildthing · 10-20-2014, 07:24 AM

Question is, do you still like the business for the long term?

john70t · 10-20-2014, 07:44 AM

Berkshire Hath invested in trains, given that freeways will clog and petrol always goes up.
A long-term investment.

Recycling is cheaper than sourcing new: Nine Dragons Paper - A Fortune From Recycling
G.S. is going into the Al Fort Knox business: http://www.nytimes.com/2013/07/27/opinion/goldman-sachss-aluminum-pile.html?_r=0
dC Auto has a corner on used Pcar parts.
Byron has more than all of them in his backyard.

Physical is better than paper.
Time to open a junkyard