CCP - Credit Corp Group

[chops_a_must]

Yeh, I definately know what you mean about the going away and letting it sink in. I used to do the same at Uni with Economics when it became really complex, especially with trade models.

You probably had problems with economic models because the complexity is an attempt to hide the invalidity of what they present.

As I said to the Economics professor who tried to get me to study it, "No way! A retarded chicken can spot the problems in what you teach." One day I will write it all down I swear. Absurdum ad infinitum is the phrase that comes to mind for short.

X1000, damn, ah well, I wouldnt buy 100 contracts anyways. Wont have to worry about the margin call, will only ever use what I actually have in my bank, and fortunately that is a decent amount.

One way to deal with it is to look at stocks below $10 perhaps. That makes it easier to trade multiple contracts, and I assume to vary hedging strategies down the track. A lot of theories and testing seem to point to lower dollar priced stocks being more volatile, especially to the upside, which would lead to better premiums anyway. Might be a win/win situation.

Why is there a stronger motive to exercise puts than calls? I thought price came down to those 6 factors, strike price, volatility, contract length etc etc.

Loss aversion. Downward moves tend to be faster and longer for the time in the individual thrust, than sustained upward moves. Puts are also used to hedge for people with long positions, which is most. So the demand on balance, especially in volatile times is higher. I'm sure there are a heap of other reasons as well.

No idea what you mean about writing a contract. Isnt that what market makers do? We just buy or sell the contracts.......ha ha, my brain is fried, 12 hours straight of options today has done my head in.

Anyone can write a contract with the correct set up, not just market makers. We are looking at selling the written contracts (writing them), not selling already purchased contracts.

Yeh, its slowly all sinking in, well at least just the basic strategies and terms. I think I have them downpat now, just need to reread as I start implementing them down the tack.

Ive only started learning about options 4 days ago I think now, so still a lot to learn!

Oh and as for writing it out it all out, thats why with every post now I try and relate an options strategy to it if I can, just so I can keep writing it out and let it sink in.

Think its about time for bed! What a way to spend a Saturday night he he, the joy of us investment nerds!

4 days and you are writing about it. Not bad. I usually like to wait a while, so I don't seem like an idiot. Lol! But you don't learn if you don't speak up...

At the end of the day, I think the market is a pretty big meeting point for people from every where, who deep down are addicted to learning.

 

[Buffettology]

Yeh, most economic models are useless. However, some very basic ones are extremelly accurate I beleive, and most good lecturers teach that they are only models and hence, cannot always replicate the real world. However, sometimes there are small basic assumptions you can change to allow the model to replicate the real world. One example is I studied fiscal and monetary policy since 1992 in order to see its outcomes. Pretty impressive I thought, the way they used proactive techniques and could actually alter trends before they occured or just after they started impacting.

Interesting on the smaller stocks having higher volatility to the upside. Thx.

Very interesting on the puts as well! Makes good sense, but wouldnt this make the stocks more volatile to the downside? Which contradicts the above statement taht smaller stocks have higher volatility to the upside? Maybe I am getting these terms confused now........

As far as the writing contacts, I think I will skip that part for now! ha ha, just confusing me more. I read about how market makers operate, but only over 20 pages or so. I think I would need an entire book to fully understand how it all works!

Yeh, 4 days, need time for it to sink in now, so I will lay off it after today. Then try add to it later on. But thats my philosphy, questions questions questions, the more I ask, the more I learn! Just wish I had someone more experienced than me in this area so I could just ask them direct and get them to help explain it. Only people I know who trade options for a living are in another City to me.

Thanks

 

[annalivia]

Interesting discussion on put options.

The following may be of interest.........

" In April 1993, with Coca Cola stock hovering around $39 per share (before splits), Buffett valued the company and determined that he would be interested in buying some more shares if the price fell below $35.

He wrote 5 million put options with a $35 strike price.

If Coke stock fell below $35, the option takers would "put" their shares to him, Buffett would be forced to buy at $35. This was perfectly fine for Buffett because he wanted to buy at that price anyway. If Coke rose instead Buffett would be happy enough, he collected a $1.50 option premium ($7.5 million) even if the stock never fell to his target. Being a strict value investor he would not have been interested in buying Coke at more than $35 so therefore the fact that it went up without him buying it was perfectly fine by him.

This is the only publicly known case where Buffett has used options, but for all we know there may be many more. It is perfectly logical that when a person has definite ideas about valuation and can name a price at which he would buy or sell that option writing could greatly increase the income from your portfolio."

As so I don't get in trouble again for plagarism the full article can be read here....
http://travismorien.com/invest_FAQ/content/view/186/64/

Another dude who uses this strategy is Ahmet Okumus whom I read about in Stock Market Wizards.
Google him if you haven't got the book.

AL

“In our view, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices." -1996 Annual Report of Berkshire Hathaway

 

[Buffettology]

Thanks for that Annavlivia, extremelly interesting.

I have never read a case of Buffett using options either, but if he used it in this case, I am sure he has used it in others!

So did he end up receiving the Premium or was he exercised?

 

[annalivia]

So did he end up receiving the Premium or was he exercised?

Don't know the answer to that.

I checked out the price in 93 to see what happened but with the stock splits it doesn't seem to make any sense.

Either way the man would have made money.(again)

 

[Buffettology]

Not sure who said they were holding this, but WOOOOOOOWWWWWWWWWWWWW!!!!!!!!!!!!!!! I would HATE to be on board now! A few window jumpers perhaps..............

And CAM has only taken a 10% hit so far!

 

[dhukka]

Looks like you've got a chance to average down some more anna. Horrible announcement today, seems there are a lot more problems than just staffing issues. Stock is down 65% as I type. Got to be happy you didn't jump in early on this ROE?

 

[ROE]

Damn Clime is precise wrong on this stock.... Am I'm glad I stick to my conviction rather than following someone else recommendation.

Stock free fall

 

[Buffettology]

Anyone have a view on this in its current wave of desperation? Could become a very nice value for the long-term, I just cant be fukced doing all the calculations (with a bit of guess work as far as future flows, assuming their $10-12 mil NPAT even comes to fruition).

 

[ROE]

Now I come in for a kill, I ordered 10,000 shares
I got it all worked out and waiting for this day

 

[rgdk]

There may be long term value in this but every institution I think has lost faith in management and that takes quite a while to rebuild. I think that they will have to put a double century on the board before that happens...

All I can say is thank god I recently reshuffled out of CCP into Beach Petroleum during the recent volatility.

Nice to see that I can make some correct decisions to counteract the bad ones (see the MFS thread for more on that!)

 

[dhukka]

Not sure who said they were holding this, but WOOOOOOOWWWWWWWWWWWWW!!!!!!!!!!!!!!! I would HATE to be on board now! A few window jumpers perhaps..............

And CAM has only taken a 10% hit so far!

This is? Was? CAMs biggest holding, Roger Montgomery has made a major boo boo on this one. Remember the statement he sarcatically made back when the intial downgrade was made?

"One of my peers who has sold CCP, said "downgrades come in threes Rog". I trust that was not the only 'analysis' he did.

Mr Montgomery is wearing some egg on his face after this one.

There will be a lot of pissed off CAM shareholders and other stockval users who bought in on Clime's glowing reports of the company.

Just a quick back of the envelope. The company has a forecast dividend of 20 cps this year. Profit has been downgraded around 40%. Even if you half the dividend that company is paying about an 8.5% yield, but how safe is that yield?

 

[Buffettology]

Now I come in for a kill, I ordered 10,000 shares
I got it all worked out and waiting for this day

Really? You believe its cheap and still viable for great returns in the long-run..........................................?

 

[ROE]

At this price I factor in all my margin for safety, just load it up and dont ask questions ...
like people who sell out on down grade..sell first ask later...

in this case I buy first ask question later

 

[Buffettology]

This is? Was? CAMs biggest holding, Roger Montgomery has made a major boo boo on this one. Remember the statement he sarcatically made back when the intial downgrade was made?



Mr Montgomery is wearing some egg on his face after this one.

There will be a lot of pissed off CAM shareholders and other stockval users who bought in on Clime's glowing reports of the company.

Just a quick back of the envelope. The company has a forecast dividend of 20 cps this year. Profit has been downgraded around 40%. Even if you half the dividend that company is paying about an 8.5% yield, but how safe is that yield?

ha ha, I sure wouldnt like to be Roger right now! Maybe he will resign and they can hire us fellas to run the company

I saw the div payout, looks good, but like you say, how safe is it........

Not to mention, has this slaughter ended as of yet?

I really feel sorry for you Anna, I have not taken such a big hit in my times yet, but I can only imagine the pain, especially if a large % of your portfolio was involved.

 

[ROE]

Really? You believe its cheap and still viable for great returns in the long-run..........................................?

Ok quick run down on this business as I been keep an eye on it and work out how they make their money..

They buy debt real cheap 10c to 20c to a dollar value...
If they can recover $1 wow that exellent sh*t if not they only need to recover partial debt to still make money.

Currently we are in full employment so people having trouble with debt, they can structure easy payment and can recover a lot of those debt... but like I said nothing is a sure thing but at this price I'm willing to take the risk.

blah blah I don't want to ramp on anyway do you own research etc...

 

[TheRage]

This is? Was? CAMs biggest holding, Roger Montgomery has made a major boo boo on this one. Remember the statement he sarcatically made back when the intial downgrade was made?



Mr Montgomery is wearing some egg on his face after this one.

There will be a lot of pissed off CAM shareholders and other stockval users who bought in on Clime's glowing reports of the company.

Just a quick back of the envelope. The company has a forecast dividend of 20 cps this year. Profit has been downgraded around 40%. Even if you half the dividend that company is paying about an 8.5% yield, but how safe is that yield?

I was under the impression TRS was Cam's biggest shareholding then CCP was next. I agree that Roger has some explaining to do. Surely an institution like Cam should have access to information from management which could give an indication that NPAT was going to drop another 40%. I smell a stinky management rat in credit corp at the moment. How the hell does it take 4 months to work out that things are going to be 40% worse. I broke my own investment rules on CCP when I bought in 5.6. I have a rule never to buy into a stock with share specific weakness like a downgrade until enough time has passed to see whether there will be a turnaround. I simply loved the numbers on this one enough to ignore my own rule. Stupid me. Anyway CCP only makes up 5% of my portfolio. But I am mad at myself and the lesson has been learn't.

 

[Joe Blow]

100 character minimum post length in stock threads is not a joke and we expect people to abide by it.

Padded out posts WILL be removed.

 

[Buffettology]

What was your order filled at ROE? Im seriously contemplating buying this, as ROE based on current prices would still not be THAT bad and one-off bad news signs like this are always good buying opportunities.

I might buy up a small parcel.

 

[ROE]

Yes my ordered is filled at market price .. I don't muck around when stock fall this far..i come in at market price...

I'm selling down some of other stock to free up cash and come in for more kill depending what price it trades by the day end.