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#353 - How Many Shares Of Stock Should You Buy?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How many shares of stock should you buy?” I’ll give you my honest opinion on this and I think the answer is...

#353 - How Many Shares Of Stock Should You Buy?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How many shares of stock should you buy?” I’ll give you my honest opinion on this and I think the answer is...

A partire dalThe "Daily Call" From Option Alpha


#353 - How Many Shares Of Stock Should You Buy?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How many shares of stock should you buy?” I’ll give you my honest opinion on this and I think the answer is...

A partire dalThe "Daily Call" From Option Alpha

valutazioni:
Lunghezza:
3 minuti
Pubblicato:
Sep 10, 2018
Formato:
Episodio podcast

Descrizione

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How many shares of stock should you buy?” I’ll give you my honest opinion on this and I think the answer is zero. I do not think that you should generally use stock unless you're forced to use stock in your account. Now, this is my opinion on this and I think that stock is incredibly inefficient and also requires a lot of capital. What I think you should do instead is I think you should use options to trade stocks synthetically. And so, what I mean by this is that if you are absolutely bent on owning underlying shares of a particular company, why not just trade these synthetic equivalent of long stock which would be to buy an at the money call and sell an at the money put and by doing that, you basically trade the synthetic equivalent of what would be a long stock position, but the requirement for capital would be considerably less to do this. Now, if you’re in an IRA or a retirement account, you can also replicate very similar, a stock position by buying a deep in the money call option with maybe an 80 or 90 Delta and that would again, require much less capital and be a little bit more efficient in not only replicating the upside potential of a stock, but also protecting you in case the stock actually moves lower. I think unless you are forced to do it or unless you have some underlying assumption that requires you to own stock, actually owning shares of stock is incredibly inefficient and also leaves you open and vulnerable to a lot of risk. Now, if you do decide to buy stock, the number of shares would be equivalent to the amount of risk that you're allowed to take for that position. Since we openly suggest that people should never invest more than 1% to 5% of their account in risk per ticker symbol, I would suggest that you keep the allocation really low. If you buy shares of a particular stock like Amazon or Google or Netflix or Tesla which are all higher-priced stocks, you would want to keep your share account low, so that the capital that you have at risk and in the market exposed is less than 5% of your total account balance. As always, hopefully this helps out. If you have any questions, let me know and until next time, happy trading.
Pubblicato:
Sep 10, 2018
Formato:
Episodio podcast