Dividend Growth Forum
What Did You Buy Today? - Printable Version

+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=15)
+--- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=33)
+--- Thread: What Did You Buy Today? (/showthread.php?tid=699)

Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629 630 631 632 633 634 635 636 637 638 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654 655 656 657 658 659 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767


RE: What Did You Buy Today? - Otter - 05-04-2021

(05-04-2021, 06:09 PM)NilesMike Wrote: [If I sell a call option that gave me the right to buy 100 shares of T in 60 days for $35/share if T closes over $35 on that day, I have not sold any interest in T. I have sold a unique contract that provided me the right to purchase T 60 days in the future if the contract conditions were met. If, 30 days later, I buy a call option giving me the right to buy 100 shares of T in 30 days for $35/share if T closes over $35 on that day, I have purchased a very different contract due to the remaining expiry period at the time of purchase]

Lots of confusion of terms in that paragraph.

How so?

Day 1 I purchase a call option that provides me the right to purchase 100 shares of T in 90 days (expiry August 1, 2021 for sake of this example) for $35/share (strike) if the price of T is above the strike price on August 1, 2021. I am ignoring early exercise for the sake of simplicity.

Day 30 I sell that call option to someone else for less than what I paid for it (need a loss somewhere in the relevant time period to trigger the wash-sale rule). 

Day 60 I purchase a call option that provides me the right to purchase 100 shares in 30 days (expiry August 1, 2021) at $35 strike. 

The call I purchased on Day 60 is not the same call I purchased on Day 1 and sold on Day 30. It is a completely different beast, and its pricing is driven by the short duration remaining on the call option (it is a weekly at that point, and likely priced very differently than it was on Day 1, if we are talking about anything other than edge cases like deep OTM/ITM options). 

The option is also not an interest in T directly. It is not shares in T. T is not listing my interest in their books as equity. It is a derivative tied in part to the value of T's shares, and which provides the option (but not the obligation) to transact in shares of T at a set price if the contract conditions are met.


RE: What Did You Buy Today? - fenders53 - 05-04-2021

(05-04-2021, 04:47 PM)Otter Wrote:
(05-04-2021, 04:34 PM)fenders53 Wrote:
(05-04-2021, 04:30 PM)Otter Wrote: I would take it one step further, too, and say there is a valid argument to be made that options with identical strikes/expiries, but purchased at different times, are not "substantially identical." Unlike stocks, options are time-limited, and value decay due to the running of time (Theta) is a very real driver of option value.

The risk profile of an option with two months on the clock is very different from an option with 30 days left. It is quite possible, in the context of options, to purchase an option within the wash sale period that is materially different from the "same" option when it was sold. Stocks don't really have that theta time decay component.

I suspect these complexities are one of the reasons the IRS hasn't published any rules.
Oh you are really reaching now. Judge doesn't want to hear about no theta nonsense lol.  An AUG strike 50 is an AUG strike 50.  I'd pay to watch you argue that though.  Smile

That would be the last argument in the brief. Give the judge something to deny and uphold the other two arguments, while emphasizing the unique nature of options vs. stocks. Unless, of course, your client bought AUG strike 50s on different dates and that's the only argument you can run with. 

You can really start arguing how many angels can dance on the head of a pin once you start nit-picking the differences between stocks and options. If I have a wash-sale of 100 T shares, it means that within the wash-sale period, I obtained 100 other T shares. I still own 100 shares of T at the end of the day. Everything is substantially identical. 100 T is 100 T. 

If I sell a call option that gave me the right to buy 100 shares of T in 60 days for $35/share if T closes over $35 on that day, I have not sold any interest in T. I have sold a unique contract that provided me the right to purchase T 60 days in the future if the contract conditions were met. If, 30 days later, I buy a call option giving me the right to buy 100 shares of T in 30 days for $35/share if T closes over $35 on that day, I have purchased a very different contract due to the remaining expiry period at the time of purchase.

(05-04-2021, 06:23 PM)Otter Wrote:
(05-04-2021, 06:09 PM)NilesMike Wrote: [If I sell a call option that gave me the right to buy 100 shares of T in 60 days for $35/share if T closes over $35 on that day, I have not sold any interest in T. I have sold a unique contract that provided me the right to purchase T 60 days in the future if the contract conditions were met. If, 30 days later, I buy a call option giving me the right to buy 100 shares of T in 30 days for $35/share if T closes over $35 on that day, I have purchased a very different contract due to the remaining expiry period at the time of purchase]

Lots of confusion of terms in that paragraph.

How so?

Day 1 I purchase a call option that provides me the right to purchase 100 shares of T in 90 days (expiry August 1, 2021 for sake of this example) for $35/share (strike) if the price of T is above the strike price on August 1, 2021. I am ignoring early exercise for the sake of simplicity.

Day 30 I sell that call option to someone else for less than what I paid for it (need a loss somewhere in the relevant time period to trigger the wash-sale rule). 

Day 60 I purchase a call option that provides me the right to purchase 100 shares in 30 days (expiry August 1, 2021) at $35 strike. 

The call I purchased on Day 60 is not the same call I purchased on Day 1 and sold on Day 30. It is a completely different beast, and its pricing is driven by the short duration remaining on the call option (it is a weekly at that point, and likely priced very differently than it was on Day 1, if we are talking about anything other than edge cases like deep OTM/ITM options). 

The option is also not an interest in T directly. It is not shares in T. T is not listing my interest in their books as equity. It is a derivative tied in part to the value of T's shares, and which provides the option (but not the obligation) to transact in shares of T at a set price if the contract conditions are met.
I agree with Mike.  And I am fully confident you could make a compelling argument against that thesis if we gave you 30 minutes to prepare.  Stop me when I tell a lie.  Smile


RE: What Did You Buy Today? - Otter - 05-04-2021

You buy and sell options all the time. The timing of the options purchase is a huge factor in the value of an option, even over time periods as short as the 61-day window that can trigger the wash-sale rule. I don't buy weeklies, but I'm happy to sell them. Theta usually works in the seller's favor on a weekly. Buying weeklies is wallstreetbets craziness.

The value of a stock can fluctuate over a 61-day period, but the wash-sale rule recognizes that you bought and sold the same asset. I can hold the T I purchased as long as I want to in the hopes that it will do what most other stocks do and go up over time, making me a profit (maybe not with T, LOL). That can't be said of an option, which comes with a hard expiration date and a binary outcome on expiry.


RE: What Did You Buy Today? - NilesMike - 05-04-2021

THIS [How so?

Day 1 I purchase a call option that provides me the right to purchase 100 shares of T in 90 days (expiry August 1, 2021 for sake of this example) for $35/share (strike) if the price of T is above the strike price on August 1, 2021. I am ignoring early exercise for the sake of simplicity.

Day 30 I sell that call option to someone else for less than what I paid for it (need a loss somewhere in the relevant time period to trigger the wash-sale rule).

Day 60 I purchase a call option that provides me the right to purchase 100 shares in 30 days (expiry August 1, 2021) at $35 strike.

The call I purchased on Day 60 is not the same call I purchased on Day 1 and sold on Day 30. It is a completely different beast, and its pricing is driven by the short duration remaining on the call option (it is a weekly at that point, and likely priced very differently than it was on Day 1, if we are talking about anything other than edge cases like deep OTM/ITM options). ]

IS NOT THAT [If I sell a call option that gave me the right to buy 100 shares of T in 60 days for $35/share if T closes over $35 on that day, I have not sold any interest in T. I have sold a unique contract that provided me the right to purchase T 60 days in the future if the contract conditions were met. If, 30 days later, I buy a call option giving me the right to buy 100 shares of T in 30 days for $35/share if T closes over $35 on that day, I have purchased a very different contract due to the remaining expiry period at the time of purchase]

I understand your points but you may be confusing some readers by switching between buying and selling and insinuating that they both convey a right rather than obligation depending on buying or selling.

Additionally, an option does not become a weekly by having X amount of days left. An option chain is either a weekly or a monthly chain. Important in that often times a weekly does not have the volume to be very liquid. The liquidity is typically in the monthly. I just fat fingered a weekly instead of a monthly, getting in no problemo, now try to get out! No bueno even though the trade is up handsomely but no volume to fill me. ARRGH


RE: What Did You Buy Today? - ChadR - 05-04-2021

(05-04-2021, 04:01 PM)fenders53 Wrote:
(05-04-2021, 03:39 PM)ChadR Wrote:
(05-04-2021, 03:04 PM)vbin Wrote:
(05-04-2021, 02:48 PM)fenders53 Wrote:
(05-04-2021, 02:39 PM)vbin Wrote: Does wash sale rule applies while rolling options?
If you are moving the date or strike  I can't imagine that works.  It's not the same security/investment.  Chad would know.
I find differing opinions online. It's not clear. Some say it doesn't, some say it does. @ChadR any idea?

The reason you find differing opinions is because the Treasury Department hasn't issued any regulations on this.  The conservative route is yes they do apply since you are going in the same direction with the old option as the new option.  The aggressive route is no they don't apply since it is a different option with different dates and or prices.

Now it's getting taken out of your hands in some cases.  If the brokerage company you uses says it's a wash sale and reports it to the IRS as one, you're pretty much stuck reporting it that way.  Now you can not report the wash sale, but you might get audited over it.  You would have to fight it all the way to the Supreme Court.  This might get the Treasury Department to finally issue some regulations on this.  But how much are you going to be out in attorney and CPA fees to get them to issue regulations on this?

Now wash sales don't apply to gains at least.
Thanks Chad.  Not exactly what I thought you would say, but it makes sense.  We are clearly selling derivatives of the exact same security, so it's not so hard to make the case we are subject to the wash rule. I guess I will keep my option trades in my tax advantaged accounts forever.

Not exactly sure what you mean by directional though.  In an upside down trade I can, and have, rolled my future strike up or down after considering time value when the trade occurred.  In the end buying or selling a put or call is clearly a bullish or bearish trade by definition.

Same direction in that both options are betting on the stock going up or both options are betting on the stock going down.


RE: What Did You Buy Today? - Otter - 05-04-2021

(05-04-2021, 07:13 PM)NilesMike Wrote: THIS [How so?

Day 1 I purchase a call option that provides me the right to purchase 100 shares of T in 90 days (expiry August 1, 2021 for sake of this example) for $35/share (strike) if the price of T is above the strike price on August 1, 2021. I am ignoring early exercise for the sake of simplicity.

Day 30 I sell that call option to someone else for less than what I paid for it (need a loss somewhere in the relevant time period to trigger the wash-sale rule).

Day 60 I purchase a call option that provides me the right to purchase 100 shares in 30 days (expiry August 1, 2021) at $35 strike.

The call I purchased on Day 60 is not the same call I purchased on Day 1 and sold on Day 30. It is a completely different beast, and its pricing is driven by the short duration remaining on the call option (it is a weekly at that point, and likely priced very differently than it was on Day 1, if we are talking about anything other than edge cases like deep OTM/ITM options). ]

IS NOT THAT [If I sell a call option that gave me the right to buy 100 shares of T in 60 days for $35/share if T closes over $35 on that day, I have not sold any interest in T. I have sold a unique contract that provided me the right to purchase T 60 days in the future if the contract conditions were met. If, 30 days later, I buy a call option giving me the right to buy 100 shares of T in 30 days for $35/share if T closes over $35 on that day, I have purchased a very different contract due to the remaining expiry period at the time of purchase]

I understand your points but you may be confusing some readers by switching between buying and selling and insinuating that they both convey a right rather than obligation depending on buying or selling.

Additionally, an option does not become a weekly by having X amount of days left. An option chain is either a weekly or a monthly chain. Important in that often times a weekly does not have the volume to be very liquid. The liquidity is typically in the monthly. I just fat fingered a weekly instead of a monthly, getting in no problemo, now try to get out! No bueno even though the trade is up handsomely but no volume to fill me. ARRGH

Yeah, that paragraph in the originally quoted post wasn't clear. I was talking about selling the call option in the sense of selling to close for a loss a call that I had bought to open previously, to trigger the applicability of the wash-sale rule. Essentially, a poorly worded attempt to articulate what I describe on Day 30 in the subsequent post. 

I also got sloppy calling them weeklies, but was trying to distinguish between an option purchased with 90 days remaining to expiry vs. something that wins or loses within 30 days. WSB has a crude term for OTM options expiring soon, but I was trying to avoid using it.


RE: What Did You Buy Today? - EricL - 05-04-2021

You guys are speaking a foreign language to me. Anyone buy any DGI stocks lately? ?


RE: What Did You Buy Today? - fenders53 - 05-04-2021

(05-04-2021, 08:26 PM)EricL Wrote: You guys are speaking a foreign language to me. Anyone buy any DGI stocks lately? ?
They sell them on this thread as fast as they buy them lol.  I added some TSM.  I'd like to think that is a DGI stock.


RE: What Did You Buy Today? - ken-do-nim - 05-05-2021

(05-04-2021, 08:26 PM)EricL Wrote: You guys are speaking a foreign language to me. Anyone buy any DGI stocks lately? ?

I had the same impression.

I don't have any new money coming to me for a long time*, but I'm thinking, once the nasdaq warms up a bit - maybe in June? - to liquidate my taxable account TQQQ and pick up IBM and KMI.



* I'm pulling out the dividends and sending them to my checking account until at least October.


RE: What Did You Buy Today? - fenders53 - 05-05-2021

The forum is small and this is our socializing thread. Some days you are just going to have to put up with us arguing about macro economics and option tricks lol.


RE: What Did You Buy Today? - Otter - 05-05-2021

(05-05-2021, 07:18 AM)fenders53 Wrote: The forum is small and this is our socializing thread.  Some days you are just going to have to put up with us arguing about macro economics and option tricks lol.

Haha, true. Right now my DGI stuff is mostly doing what I want and throwing off dividends. Didn't have much exposure to growth stuff, so have been building a portfolio of that lately. No harm in letting that run for 20 years and seeing if any turn out to be home runs while the boring DGI stuff slowly and steadily does its compounding thing. I have a hard time getting many DGI stocks to pass my value screens at the moment. Unless the reddit kids get deep into the psychedelics, a Ute like DUK isn't going to run 500% in a year, so buying it at a P/E of 19.6 (well above its 10yr average of 17.5) probably carries a fairly high risk of subpar returns. 

I buy stuff that is unloved, and usually start buying too early while it is still sliding. I could have waited to buy some of the tech stuff I bought recently, but had no way of knowing when I bought if it would slide further, or if the dip was just a blip like dozens of others over the past several years. 

Fed printer still seems to be running though, and someone told Yellen to hush and get on the Brrrrrrrrrrrrrr train late yesterday, so I think the gravy train to the markets will continue for the short term. I'd be shocked if there are any rate hikes before the midterms in 2022.


RE: What Did You Buy Today? - fenders53 - 05-05-2021

(05-05-2021, 08:04 AM)Otter Wrote:
(05-05-2021, 07:18 AM)fenders53 Wrote: The forum is small and this is our socializing thread.  Some days you are just going to have to put up with us arguing about macro economics and option tricks lol.

Haha, true. Right now my DGI stuff is mostly doing what I want and throwing off dividends. Didn't have much exposure to growth stuff, so have been building a portfolio of that lately. No harm in letting that run for 20 years and seeing if any turn out to be home runs while the boring DGI stuff slowly and steadily does its compounding thing. I have a hard time getting many DGI stocks to pass my value screens at the moment. Unless the reddit kids get deep into the psychedelics, a Ute like DUK isn't going to run 500% in a year, so buying it at a P/E of 19.6 (well above its 10yr average of 17.5) probably carries a fairly high risk of subpar returns. 

I buy stuff that is unloved, and usually start buying too early while it is still sliding. I could have waited to buy some of the tech stuff I bought recently, but had no way of knowing when I bought if it would slide further, or if the dip was just a blip like dozens of others over the past several years. 

Fed printer still seems to be running though, and someone told Yellen to hush and get on the Brrrrrrrrrrrrrr train late yesterday, so I think the gravy train to the markets will continue for the short term. I'd be shocked if there are any rate hikes before the midterms in 2022.
Agreed, there is just so much we can do with PG and JNJ on a daily basis.   I also come here for the differing viewpoints, some debate and comradery.  We know each other's temperment and we can disagree without blowing up the thread.  Not many other places on the internet where that is true.  I fully support your right to be wrong Otter.  Just kidding, I mostly agree with you.  I doubt rates are increased before 2023 unless inflation gets crazy which is not out of the question.  Back in the day a real FED Chief that wasn't scared of politicians would raise them a quarter point this summer just to get the market's attention.  There is a helluva lot more going on with regards to employment than a tiny change in interest rates.