/biz/ - Business & Finance

[Anonymous No.16965173]

>MARGIN
Ok guys, heres the secret to LITERALLY FREE MONEY.
Open a margin account
Find a dividend stock, 3%+
Look at the dividend history
Buy as much as you can with maximum margin near the declaration date.
Put a trailing stop loss at 4%
Sell OTM calls
Exit after dividend record date.
LITERALLY FREE MONEY

Example:
$10,000 account
$10,000 margin at 8%
Buy 645 shares KHC at $31
Set trailing stop loss 29.7
Sell calls 3 weeks out, strike 32, for extra $162
Wait for $0.30 dividend and exit
Maximum, extremely low probability risk = $800 - $162 = $638
Max EZ Gain = $193 div + up to $645 (reaching your call strike) + $162 - $50 margin interest = $950
You end up with nearly 10% gains over 3 weeks and you compound this each time with even more leverage.

You're welcome.

[Anonymous No.16965183]

autism

[Anonymous No.16965202]

>>16965183
Was that too complicated for you?

[Anonymous No.16965236]

this actually looks interesting
might try it

[Anonymous No.16965260]

>>16965173
Enjoy losing all of your money, brainlet. If this thread is up in an hour, I'll tell you exactly why.

[Anonymous No.16965278]

>>16965173
ooo thanks for the free money buddy I'm now a billionaire

[Anonymous No.16965298]

>>16965260
Oh? Something like:

>You will always hit your stop loss!
Oh well, thats called risk. Sometimes you are unlucky

>Someone will exercise your call!
They exercise my OTM call so I instantly sell my stocks green?

>The margin interest is too high!
Then use a better broker retard.

>You'll barrow too much!
Just calculate the best amount of margin/interest youd like to risk.

Anything else?

[Anonymous No.16965316]

>>16965173
I shorted BTC from 9100 and made 85k dollars you fucking n00b

[Anonymous No.16965317]

>>16965298
Nah, none of those. Also, lmao at that filename
>the-laughing-successful-businessman-in-black-suit-is-smoking-cigar-and-drinking-alcohol-on-b.jpg

[Anonymous No.16965333]

>>16965317
Indeed.

[Anonymous No.16965381]

>>16965333
Explain for a brainlet calls. You sell call options on your stock a couple weeks before the declaration date? I thought you just bought stocks, and then calls were a separate thing where YOU can call more... do you mean sell puts or am I brainlet (never option traded)

Also why not just do this for the dividends only? It seems like the calls just add extra rosk but the real money is on dibidends right?

AND BIGGEST QUESTION: cant remember my accounting classes were forever ago, but companies cant have "vested" time for dividends declared on their outstanding stock right? It's just whoever has the stock then eh?

Thank you based moneyanon

[Anonymous No.16965421]

>>16965381
Correct settled positions as of the record date for divs. only thing moneyanon needs to incorporate is taxes.

[Anonymous No.16965441]

>>16965173
dividend yield is YEARLY, retard
divide your "profits" by 4

[Anonymous No.16965479]

>>16965381
>Explain for a brainlet calls
This is called "covered calls". You sell calls for stocks you already own. You can sell 1 call per 100 stock you own.
In my example, you sell 6 calls (because you have 600 stock) for $0.27 per stock (times 100 so its $27 for 1 call of 100 stocks). You sell at a strike price (the price that someone could buy the stock from you) at $32. This means if someone exercised the option, you would automatically sell all your stocks at $32, thats +$1 per stock from original buy price of $31, so you instantly profit $600 (and repay the margin in this case.) Its kind of complicated, I suggest checking out https://www.investopedia.com/terms/c/coveredcall.asp

>Also why not just do this for the dividends only? It seems like the calls just add extra rosk but the real money is on dibidends right?
Calls actually subtract your risk, but it caps your maximum payout. If you sell calls at a higher strike than you bought your shares, then it protects you for that much of a drop. So if you end up selling the stocks at $30.50 you lost $300. However, if you sold calls for $200, then your loss is only $100 overall, but you also still collect the dividend so you could still end up green even though the stock went down.

>companies cant have "vested" time for dividends declared on their outstanding stock right? It's just whoever has the stock then eh?
Probably talking about something else. As long as you own the stock at the close of the "record" date, you get the dividends, even if you sell the next day. Its common that investors sell the next day after a record date and you sill see the stock go down by the amount the dividend payed. Thats why you buy before the "declare" date so you can get in before people buy it for dividends.


>>16965441
Tard, I calculated using the actual dividend of $0.30 (a single payout). Technically the last dividend for KHC was $0.40 but I am just low balling for this example.

[Anonymous No.16965492]

>>16965479
Brah... thanks for the great, detailed response man. Cheers

[Anonymous No.16965494]

i traded on margin and also trade options in my 20's. lost everything. you need to be very mature, stable-minded, to do options or margin trading. there's a difference between taking calculated risks and just being a dumbfuck gambler.

[buy chainlink No.16965497]

>>16965173
>>>/redd*t/ is thataway
go back to WSB you moronic shitskin fag

[Anonymous No.16965501]

>>16965497
Sorry this isn't a chainlink thread Pajeet.

[Anonymous No.16965647]

>>16965494
True, the strategy I described is not for beginner investors.

[Anonymous No.16965711]

>>16965316
where can i learn this power?

[Anonymous No.16965728]

>>16965173
>Max EZ Gain = $193 div + up to $645 (reaching your call strike) + $162 - $50 margin interest = $950
1) Considering the stock will usually fall by the dividend amount or more and not go up in price after the record date, your profit calculation is very low probability.
2) if you sell the shares before the calls expire, you need to buy back the calls too or risk getting stuck with a naked position (unlimited risk), further reducing the potential profit.

Still, interesting thread anon.

[Anonymous No.16965764]

>>16965728
>1) Considering the stock will usually fall by the dividend amount or more and not go up in price after the record date, your profit calculation is very low probability.
Not false, but thats why you estimate the declare date and buy before then, that way you get in before the majority of people get it. Of course you can always exit before the record date.
>2) if you sell the shares before the calls expire, you need to buy back the calls too or risk getting stuck with a naked position (unlimited risk), further reducing the potential profit.
Again, not false. Thats why you buy back your calls before closing the position, and it should be less than what you sold it for due to theta decay. If it goes up, then so did the stock, and that would make up the difference in the call buyback. Ideally, the calls would expire worthless (assuming you used an OTM strike, like +10% from your purchase price) and then you exit the position.

[Anonymous No.16965811]

>>16965173
Got a better one, not gonna capslock this one though.
Open a short position on on perpetual market.
Open a long position on future market with set expiration date.
Funding only applies for the first and Short is always more profitable than long - even in a bear market.
If one of the positions gets hit with a margin call, close the other one and you will have your initial investment back + funding.

[Anonymous No.16965826]

>>16965479
Is your IQ like 160 or something? I’m around 145 and I’m at a loss.

[Anonymous No.16965832]

>>16965173
assuming you are a god at picking the right entry

[Anonymous No.16965862]

>>16965811
>Funding only applies for the first and Short is always more profitable than long - even in a bear market.
What? I think you need to explain your thoughts better, anon.

>>16965826
Years of trading and research, but real investment firms pull off super insanely complicated bullshit thats should probably be illegal.

>>16965832
You don't need to pick the right entry, just a low risk stock dividend stock.

[Anonymous No.16965879]

>>16965711
its called survival bias

[Anonymous No.16965899]

>>16965298
>free money

If there’s risk involved that really doesn’t count as free money and you shouldn’t advertise it as such. Also beats me why tf someone would buy call options with a 32 strike price for Heinz

[Anonymous No.16965911]

>>16965647
>>16965494
anons who want to be cautious: build up at least 5 years daytrading stocks/shitcoins, before you trade on margin or trade options. or if you're feeling lucky and want to start sooner then 1-2 years. but be at least 25-30 years old. not advice just a warning.

[Anonymous No.16965919]

>>16965764
>Not false, but thats why you estimate the declare date and buy before then, that way you get in before the majority of people get it.
Ok, so the plan would be to buy before the declaration date with the assumption that people will drive the price up in order to get the dividend. Then it would look like:
Most likely gain = increase in stock price after declaration date + theta decay from the short call.

This sounds good, but it implies that you can correctly estimate the declaration date. How do you do this?

[Anonymous No.16965956]

>>16965862
>What? I think you need to explain your thoughts better, anon.
Not him but I think he is talking about funding rates being positive for shorters most of the time on crypto perpetual derivatives. So what he proposes is that you short the perpetual instrument, and long the future, collecting funding while having a net zero position.

However, >>16965811
Will the contango on the futures not offset almost any gain you can get from the funding?

[Anonymous No.16965964]

>>16965919
All historical declare and record dates are publicly available.
https://www.streetinsider.com/dividend_history.php?q=KHC
You just want to get in before everyone else. The idea is that as the stock climbs up, you buy at the start of the slope instead of the bottom. But you don't want to buy too early so you don't have to pay the margin interest.
The biggest risk is if they decide not to do a dividend but thats extremely rare and usually only when a company is doing really bad. Thats what a stop loss is for, you can even set it to 1% if you're really scared, though you should be choosing a company that has virtually no risk.

>>16965911
This. I lost a lot of money when I first started trading options because they are really hard to understand until you get experience and they act totally different from normal stocks.

[Anonymous No.16965970]

>>16965173
>GUH

[Anonymous No.16965985]

Let’s see how this goes!

[Anonymous No.16966005]

>>16965970
>lmaoooo
https://www.youtube.com/watch?v=qKXrVriacUM

[Anonymous No.16966035]

I'm actually running a very similar, albeit elongated, strategy that I entered in Nov...

100 shares each KSS, M and TPR that I bought right after their huge earnings dip...about 10k invested. Sold just OTM covered calls on each way out in June 2020, which pays way more due to the time premium (I think it was like 600$ all told). The div yield should average out to >6% over two payouts (so, a realized gain of >3% over two quarters).

Only TPR is ITM at this point; KSS has ultimately stayed about the same, and M has actually made like a 12% gain vs the strike and the calls are just barely OTM.

It feels safe...I'll probably enter a shorter-term position like the OP soon. I think I'd also like to try a strategy of selling a series of calls with due dates at like 1, 3 and 6 months...a ladder strat?

[Anonymous No.16966061]

>>16966035
Nice. The idea behind this method though is to safely (relatively speaking) leverage margin.

Also, your broker might not let you sell multiple calls on the same stocks like that because (if their system isn't retarded) it will recognize that only your first call is covered and the farther out calls are naked. Maybe try it on Robinhood and see if you found a new loop hole. :)

[Anonymous No.16966064]

>>16966035
Oh, I don't buy on margin though. Still don't feel comfortable with the concept yet, at least in terms of a strategy requiring me to hold for more than a few weeks...maybe for a shorter term strategy though

[Anonymous No.16966083]

>>16966035
>KSS, M and TPR
Oh and another thing to be careful about these is that the div yield might appear large because the last years yield was high compared to the current stock price, this means the dividend has a higher probability of being lowered and adds significant risk. This is why you purchase a generally static, safe stock.

[Anonymous No.16966120]

>>16966061

Re: a "ladder" strat for the calls, I think the brokerage firm would have no problem letting me sell naked calls, though of course its of pretty fucking risky for the later contracts if any of the earlier ones get executed...I'd probably have to fold the whole strategy up at once if at any point a contract is executed...but hopefully the high price paid for the time premium on the latter contracts would more than offset the cost to close the contracts at the higher strike

>>16966083
These are some pretty big retail names with strong dividend histories and plenty of cash (even if they're bleeding)..p sure they'll maintain the divvy for at least a coupe quarters. Def something to look out for tho, good advice