# ArcelorMittal (MT)



## KaeJS (Sep 28, 2010)

What do you guys and gals think of MT?

Pays a fairly consistent dividend, down over 50% in the last 3 months.

Check it. 

http://www.google.com/finance?q=NYSE%3AMT


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## PMREdmonton (Apr 6, 2009)

The company is fine but is very cyclical in nature. If you want to hold onto it now and sell into the next peak you should be okay but it certainly could fall a lot more than it has so far.

A bet on them is basically a bet on the global economy.

If you want to be safe, make sure you can hold your position here for at least three years.

Otherwise, I am not good at calling macro plays. It may do fine if we don't go into recession and China continues with their building boom. It also could fall 30% more in the short-term.

BTW, odd story going on right now with them. Union workers have apparently held management hostage in Brussels for the past two days.


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## crazyjackcsa (Aug 8, 2010)

It's probably your best steel manufacturing play. Huge company with operations around the world. I made some money when they bought dofasco years ago, I lost track of the stock over the past few years. I agree with PMR, as goes the globe, so goes MT.


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## larry81 (Nov 22, 2010)

I have good faith in MT !

Nothing justify a 50% decline in 3 frigging months !


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## KaeJS (Sep 28, 2010)

^ That was exactly my thinking.

How a stock goes from $100 3 years ago, to only come back up halfway at $49, and then come crashing down from $35 to $16 in 3 months is crazy...


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## HaroldCrump (Jun 10, 2009)

Well, there are good reasons for it.
There is no rule in the book that says a stock must go back up to its previous level.
If there are fundamental reasons keeping it down, then it won't.
Just as an example, look at DRYS, C, RIG, RIM, just to name a few.


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## Banalanal (Mar 28, 2011)

Bought MT 3 weeks ago.


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## Homerhomer (Oct 18, 2010)

KaeJS said:


> ^ That was exactly my thinking.
> 
> How a stock goes from $100 3 years ago, to only come back up halfway at $49, and then come crashing down from $35 to $16 in 3 months is crazy...


Many stocks did not deserve the prices and valuations they had 3 years ago, this one in particular (without going into much details) since 2007 almost doubled the amount of outstanding shares so the drop in market cap is not as big as the share price may indicate, and the earnings per share went down from about $6.8 in 2008 to $1.8 in 2010, with today's economy looks like the today's stock price is quite justified.


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## KaeJS (Sep 28, 2010)

Up 8% today.

Someone fire me from investing my own money.

Hindsight is 20-20, I should have bought.

But -- my gut is saying I can still buy at $16.

Hm....... go with the gut.


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## PMREdmonton (Apr 6, 2009)

KaeJS said:


> Up 8% today.
> 
> Someone fire me from investing my own money.
> 
> ...


Funny thing with cyclicals is they can crash dramatically and bounce dramatically and hindsight is always 20-20.

Later on in my investing career it may be easier to play tranches on many such companies but now is not that time for me. I have focused most of my buying on companies that have crashed in value but persistently profitable.

If it is any consolation, I bet there is another leg down soon or in the next 3 years. This market is not on solid footing and all the calls for austerity will cause another global recession before long if many countries actually enact it. Possible tippers would include default of a large European country (Spain, Italy), popping of the Chinese real estate bubble, further weakening of the American consumer or something different altogether.


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## larry81 (Nov 22, 2010)

anyone bough this gem ?


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## larry81 (Nov 22, 2010)

I am the only one to see this opportunity ?

Anyone currently one MT or plan to buy ?


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## larry81 (Nov 22, 2010)

I might repeat myself but:

I am pondering the idea of buying a concentrated position...


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## KaeJS (Sep 28, 2010)

Larry, I have been watching this for a week.

Kicking myself for not buying at $16.

Still looks attractive at $20, but I have a GUT feeling it is going to fall again...

I am thinking about picking up 100, and then DCA'ing if it falls...

I will have to magically make money appear to buy this though. 

If I had a lot more $$$, I would go balls in! Theres no way this stock isnt at leat $30 in the future!


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## larry81 (Nov 22, 2010)

KaeJS said:


> If I had a lot more $$$, I would go balls in! Theres no way this stock isnt at leat $30 in the future!


My feeling exactly ! I will see monday morning !


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## Abha (Jun 26, 2011)

Market's not going down until after Apple reports. Everyone's expecting a blowout much like Google.

Although who knows what those idiots in Europe are going to come up with over the weekend.


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## larry81 (Nov 22, 2010)

Mt +15% today !


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## KaeJS (Sep 28, 2010)

Good thing I got in at $17.85!

Still holding!


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## KaeJS (Sep 28, 2010)

I didn't sell when it hit over $22. (which was really dumb. I was going to sell at $21, but greed told me to keep going  )

Price has come back down to the $17 range. 

With that said, I might purchase another 50 this week depending on how the market/stock moves.

Yield is over 4.25% and the stock has room to run with some limited downside, if you ask me.

I mean... how much lower is this going to go? $15 maybe?


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## GOB (Feb 15, 2011)

Down big again today, approaching $15. 

Anyone know the tax implications of holding this stock in an RRSP?


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## PMREdmonton (Apr 6, 2009)

GOB said:


> Down big again today, approaching $15.
> 
> Anyone know the tax implications of holding this stock in an RRSP?


No tax implications.

You do forfeit the ability to get a credit for the dividend withholding tax that you are paying. Then you will be taxed the withdrawals from your RRSP as regular income.


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## humble_pie (Jun 7, 2009)

normally there is no US withholding tax on dividends paid to canadian rrsp accounts. In mittal's case there may be an india or a UK withholding tax - depending on where the underlying security is registered - which tax could be passed through to ubos (ultimate beneficial owners.)

but why bother with the divs in the first place. Instead harvest revenues from an option position in the form of more favourably taxed capital gains. There are some highly appealing call spreads available in mittal right now. In addition, if the planet does go bust as the doom criers are calling it, investor has less capital at risk.


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## humble_pie (Jun 7, 2009)

further research: it's a luxembourg company. MT shares are "new york registry shares." These appear to have at least some regular voting rights.

dividends: one reliable broker reports 15% withholding tax will be applied to MT shares even in registered accounts. I'm guessing that this may be because of their exotic nature (NY reg'ry shares) which are not covered by canada-US tax convention. Not able to find explanation on arcelormittal dot com. Not willing to contact co or transfer agent to find out anything further.

conclusion: bullish call spreads look more inviting than ever. Bypass any & all dividend mishaps. Although it's true that MT does pay a run-of-the-mill dividend, these dollars can far better be harvested as capital gains with no withholding tax in the form of option premiums.

company has lowered guidance, near term does not look rosy. Plenty of time to put on a position.


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## GOB (Feb 15, 2011)

humble_pie said:


> further research: it's a luxembourg company. MT shares are "new york registry shares." These appear to have at least some regular voting rights.
> 
> dividends: one reliable broker reports 15% withholding tax will be applied to MT shares even in registered accounts. I'm guessing that this may be because of their exotic nature (NY reg'ry shares) which are not covered by canada-US tax convention. Not able to find explanation on arcelormittal dot com. Not willing to contact co or transfer agent to find out anything further.
> 
> ...


Thanks for your insight. I see them as a strong play in the steel industry which will bounce back as demand from developing nations increases. It may take a while with this mess we're in but in the meantime I'll collect a pretty good dividend.


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## humble_pie (Jun 7, 2009)

arcelor mittal also trades as AMSYF in the foreign section of the pink sheets. I've written about this little-known intriguing foreign division of the pink sheets before. Bref, it's highly respectable, stocks are called tracker stocks, every canadian stock that's not interlisted in US markets has a pink sheet US tracker stock. It's awkward, clumsy & expensive to buy/sell tracker stocks.

AMSYF is a tracker stock. Its closing price friday was 15.40 on nano-volume of 200 sh. Meanwhile MT closed fri at 15.43 on volume of 4.6 million although it was a half-day.

perhaps the NR withholding on the dividend has something to do with the discrepancy, the amounts are roughly about right.

guessing again: the withholding tax could be luxembourgeois. The grand duchy is a tax haven; these usually have no tax treaties or limited tax treaties with other countries. This could explain why the tax is applied to canadian registered accounts.

company has what is probably an excellent IR division at arcelormittal dot com. No doubt they can explain the withholding in detail to any investor in any country in the world. Would i ask them? no because i'd go straight to the options.


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## larry81 (Nov 22, 2010)

In a couple years this is going to look like an outstanding buying opportunity. The real question is whether tomorrow or next week or next month are going to look even better than right now...


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## KaeJS (Sep 28, 2010)

Don't you mean in a few years it going to look like it WAS a good buying opportunity? 

I'd average down my price, but I am just borrowing way too freaking much right now.

I have a lot of nice dividend payers and the average between all the dividends I receive is about 5.4% yield, I believe. So, I am happy with my purchases.. but damn. I wish I had more cash coming in.


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## larry81 (Nov 22, 2010)

So... who bought this gem ? up 13% this morning


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## ddkay (Nov 20, 2010)

With a 2.14 beta this is almost as good as holding a triple leveraged ETF. I thought you weren't interested in those?

TNA +13.44%
MT +12.97%


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## larry81 (Nov 22, 2010)

ddkay said:


> With a 2.14 beta this is almost as good as holding a triple leveraged ETF. I thought you weren't interested in those?
> 
> TNA +13.44%
> MT +12.97%


No its not, since leveraged ETF return are compound DAILY, holding them would KILL a portfolio. 

https://www.wealthsprout.com/Commun...-and-Dangerous,-Math-Behind-Leverage-ETF.aspx

http://www.horizonsetfs.com/campaigns/betapro/resources/MathOfHBP.pdf

Are you telling me that you are one of the many investor who dont understand the math behind these products ?


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## ddkay (Nov 20, 2010)

That's why it's generally not recommended using them longer than an intraday basis, but that doesn't make a stock like MT that is 114% more volatile than the market less risky, far from it.

Your question was who bought since the last post on November 27. The market has been on a tear for 3 sessions, both have performed relatively equally, but TNA is ahead. Typically, that's when you quit while you're ahead and book profits.

If you aren't looking for the quick 25% return in 3 days, what the heck are you doing in MT? And why do you care about its 3 day performance? Has long term investing been reduced to 3 days now? By your logic, anyone can load up a portfolio with high beta stocks and be exposed to almost no risk? Really, that's sound advice for tumultuous times. I also have some penny stocks to sell you.


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## larry81 (Nov 22, 2010)

ddkay said:


> *** lots of inferences ***


its called bottom fishing, MT is a nice big fish (and many others in the materials sector).


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## ddkay (Nov 20, 2010)

I identified a possible breakout to the upside on Friday, not just for one stock but the market as a whole. I have been telling people not to short so close to edge of a cliff, and have been making bullish calls that would likely benefit from a snapback rally (TRP, FIO) and you still rag on me. 

You have no clue about the interbank lending market and why today's attempt to tighten the Euribor-OIS spread still means nothing but disaster in the long term.

You're only here to ridicule instead of offer knowledge or learn from others, brag when the market is up, and are mysteriously absent when the market is down. If this market is out to teach anyone a lesson it's you, my lessons have been learned already.

You're now officially blocked, and you can measure P/E ratios in peace.


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## larry81 (Nov 22, 2010)

ddkay said:


> I identified a possible breakout to the upside on Friday, not just for one stock but the market as a whole. I have been telling people not to short so close to edge of a cliff, and have been making bullish calls that would likely benefit from a snapback rally (TRP, FIO) and you still rag on me.
> 
> You have no clue about the interbank lending market and why today's attempt to tighten the Libor-OIS spread still means nothing but disaster in the long term.
> 
> ...


Hey some of us have jobs you know.

As far as i am concerned, you lost all credibility when you 'predicted' the SP500 going to 100 and SU to 0...


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## KaeJS (Sep 28, 2010)

Back to the topic at hand,

I was a fool and never purchased more when I said I was going to.

I told myself I would, told others I know that I would, and I didn't.

Such is life. But I am still happy.


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## donald (Apr 18, 2011)

Anybody watching (x) us steel corp in this space?Blew up past 15%-2% and change more than (mt)

Ive been watching x for mths,obviously to scared to buy.....question is,is the materials still attractive here?do you wait for a big pull back?

Kaejs-you looking to add on dips?Guess it all hinges on europe....dont make alot of sense thou with the slowing in china.

Anybody know why mt shoot up so high?.....


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## KaeJS (Sep 28, 2010)

donald said:


> Kaejs-you looking to add on dips?Guess it all hinges on europe....dont make alot of sense thou with the slowing in china.
> 
> Anybody know why mt shoot up so high?.....


I'm waiting to add to MT, only because the economy is still not great, and there is huge potential that MT can hit back down to $14, imo.

The reason MT shot up so much is because it was undervalued and has a high beta (over 2.0, I think). So when the market goes up, MT usually goes up 2x as much.

I did some calculations on the total assets of MT compared to the actual outstanding shares and the price the shares were at a while ago... And sure, MT is a big sloth of an old company, so it's not like they have any huge growth, but MT is a still pulling in profits. The shares have just been beat, and with less cars/buildings being built right now, that happens.

In the future, though, things will accelerate, and you will see MT at $40 again.

My $0.02


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## donald (Apr 18, 2011)

Makes sense,so when conditions line-up for a rally(the whole market,since something like 80% of it trades in tandem) Do you venture into a high beta non sector specific to get a pop?(is that the idea in this quick market,and your forecasting)

Are u following (mt)specifically or just playing it because of the beta(right-now)and its your go too.....in other words news is good (mt)rises no matter what.

Its a in-out stock?just trying to grasp.....the beta stays the same or is it only high right now because of the low share price?If im making in sense.(realize materials are always cyclical)


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## KaeJS (Sep 28, 2010)

It's always a good idea to venture into high beta stocks on a rally, or short high beta stocks in a downfall due to the momentum they receive.

I am following MT. Not really trading it too much. I got in at a low price, so the dividends are quite high. (I think 3.59% when I got in?). I don't mind holding as we are always going to need steel and the stock is still undervalued, imo.

Beta will usually always stay the same, give or take a few points. Beta is basically based off the business of the company (although beta can change when a company goes through stages, ie. Company in the growth stage may have a beta of 1.5, but when it enters the mature stage, it may have a beta of 1. Example of this could probably be Microsoft way back when)

High Beta stocks is where the big money is made quickly.

Ain't nobody gonna get rich quickly trading off BMO and FTS.

Price you pay, obviously. If you're shorting a high beta stock and the market swings up.... well... you're SOL.


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## donald (Apr 18, 2011)

Understood,thanks kaejs.I wasnt sure if the beta and the market cap are corroleted....Like for example rim 2 yrs ago would of had a lower beta and a way higher marketcap right?(now its switched)The marketcap is how many shares are issuedX the current stockprice right?...or is the marketcap not tied to the stock but actual real world revenue no matter what the stock is doing?

If you get what im trying to say lol.


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## KaeJS (Sep 28, 2010)

Beta and Market Cap are not correlated. A stock that is $5 can have a high beta and a stock that is $500 can have a low beta, or vice versa.

Market Cap is the total numbers of shares outstanding multiplied by the share price. As such, Market Cap is "always changing".


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## KaeJS (Sep 28, 2010)

Can someone explain to me how this stock is under $20 when it was $100 4 years ago, and $50 2 years ago?

You'd think that with more middle income families emerging in India + China, the demand for steel would increase....


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## gibor365 (Apr 1, 2011)

KaeJS said:


> Can someone explain to me how this stock is under $20 when it was $100 4 years ago, and $50 2 years ago?
> 
> You'd think that with more middle income families emerging in India + China, the demand for steel would increase....


They don't build using steel


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## PMREdmonton (Apr 6, 2009)

There has been some share dilution of about 15%, Overall BV has contracted, operating margins are down, profit margins are down, revenues are down. The other thing that you have to consider is this is a cyclical company and you are comparing its high to its value after a depression. The other thing is cyclical companies with high cap-ex have just been pounded - look at Alcoa. They are basically getting pounded because China uses half the steel in the world but has just gone through a big real estate bubble with all kinds of ghost cities and buildings erected and now they have shown a down tick in growth. All the very cyclical commodities like steel, met coal, aluminum and copper will likely be affected if the market goes into full-blown panic. In the long-run there are other players coming online like India, Brazil, Indonesia and Vietnam so there will still be lots of infrastructure being built but just not at quite the same clip. At some point Europe and the US will get going again, too. This is a definite inflection point of sorts right now and we could be getting close to another leg down in this secular bear but I doubt we see a major collapse.

In terms of their present valuation, look at their free cash flow: -3B last year. Given that they had no FCF they basically borrow to pay their dividend.

This is not a thriving company - I'd consider selling a put near support at 15 for $1.25 for Sept. If the stock gets put to you $13.75 is your net buying price. If it isn't put to you it is the equivalent of an 8% yield for holding for 5 months.


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## KaeJS (Sep 28, 2010)

Bought another 500 at $17.28 today.

Not very happy with this stock at the moment.

I'd like for it to hit $18 again.


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## PMREdmonton (Apr 6, 2009)

KaeJS, why not sell some puts instead.

If the stock pops you can sell it off and your gains will be leveraged.

You could buy 10 puts instead of 500 stocks so long as you have the margin to cover. You could sell the Sept put at $15 strike for $125 per contract. Over 10 contract that is potentially $1250 or it the stock gets put to you, you buy at ACB of 13.75 instead of 17.28.

To me the only real reason to buy a range bound stock like this near the low is you want to hold it forever. If you want to trade more bang for the buck with the puts. Of course, you can't sell puts in registered accounts.


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## KaeJS (Sep 28, 2010)

PMR, I would love to get some puts going on this stock.

However, I have not yet set up my account for options and I have never traded options before.

I really do need to get my feet wet though. I understand how they work, I've just never actually done it. You are right - the options would be 100% better and my risk would be more limited. I don't really see the stock dropping below $15, but crazier things have happened.


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## Argonaut (Dec 7, 2010)

Your risk wouldn't be more limited, your risk would be nearly unlimited. You probably don't understand how options work.. this is not a slight, but a statement based on my own experiences starting from limited knowledge and gaining a moderate amount of knowledge through practice. I would try buying a put or call set as a directional bet to start. 

Selling puts would mean leveraging yourself even more, and a possible danger, danger, danger margin call from Questrade if said stock tanks and some other things happen. Note that the folks who sold Goldcorp puts at 45 as a "sure thing" may have had a gut check danger, danger feeling moment as of late.


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## humble_pie (Jun 7, 2009)

argo is right, these 2 do not understand options.

he said buy puts but he meant buy calls, tch.

& go ahead, try to sell 10 sep 15P in mittal. Broker is not going to accept this order, in this particular case. Even a broker like questrade will have firewalls to block this order. In this particular case.

option trades are not Look Mommies.


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## PMREdmonton (Apr 6, 2009)

HP, why can't you sell puts on MT (yes, I see the error I made - sell the puts is what I meant)? I have done options on other ADRs - not available on MT?

I just tried to put in a sept order for 15P sell and IB processed the order without issue. The only thing, of course, is you can't do so in a registered account. In registered accounts you can only sell covered calls or buy puts against stocks that you already own (i.e. hedging against a loss).


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## PMREdmonton (Apr 6, 2009)

HP is right that I don't know much about options, just dipping my feet this year.

I only sell out of the money puts on stocks trading near resistance who I wouldn't mind owning anyway. You could do the same on stocks trading anywhere including those at 52 week highs who you hope to snag on a pullback but I haven't used put selling this way. I have made quite a bit selling puts on GG and CAT this year when there has been pessimism in the stocks - get very high leveraged gains in a short period of time on those. I may do the same on TEF now or SU.

I sell covered calls mostly on stocks whose positions I"m considering exiting. I then list it for the price I want and if it is filled the stock goes away (just lost DTV on a 47 strike today but made a 3% gain holding for a month - nice single on that one). If it doesn't get filled I can write another one the next month. OF course, this is a bad strategy on a stock that you want to get rid of right away because you think it is going to tank - just sell those off right away. I lost my MSFT on a 31 strike earlier this year after having bought in at 24 then letting it ride up to 30 and then sold the call for 31 strike. I picked up a couple of dividends along the way.

Almost all the basic materials are on retreat right now. I don't like steel or copper because of China slowdown. I like NG and coal but not quite yet. I love oil producers, gold producers, uranium producers and TiO2 producers as these are scarcity plays.


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## humble_pie (Jun 7, 2009)

edmonton your correspondent appears to be a) an option beginner not a level 4 who would be allowed to sell naked puts; & b) unlikely to have the margin required to support a $15,000 naked put position.

IB is always extremely good about accepting self-proclaimed level 4s. That's because, unlike other online brokers, IB has real-time margin calculation & every IB client has presigned authorization that, the split second an account goes over margin limit in real time, IB will instantly begin selling assets out of client's account to cover the deficit. Without the client's knowledge.

reportedly this shakes clients up the first time it happens, but apparently they do get used to it.

this draconian protocol means IB will always be able to protect itself. However clients who make mistakes & send in orders to buy puts when they mean sell puts, or orders to buy puts when they mean buy calls, could quite easily turn their margins into toast, at IB.


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## PMREdmonton (Apr 6, 2009)

Yes, I'm extra cautious when I buy or sell an option on IB.

I have a large amount of cash sitting idle and I don't tend to have a lot of puts open at one time - just 2 or 3, usually. Right now I have on GG strike at 40 for May. I am trying to sell one for TEF at 15 strike for June at 1.60. I have no other put sells open. I do have a couple of covered calls open for BALT, HIG and GG. One just got called away today on DTV.

Maybe next year I'll be doing more option writing as a routine way of smoothing out my returns a bit and perhaps I'll get into more exotic things but I'm still learning about things like implied volatility and theta decay and then all the exotric strategies like dividend capture, strangles, collars, iron condors .... I'll leave consideration of those for next year once I wrap my head around how I react to options - you can always learn the mechanics of trades and what not but you don't know how you handle them until you have your money on the line. It took me a few years to progress from mutual funds to ETFs. Last year was the first year I bought stocks and mostly did large caps. This year I have ventured out more into the small cap and micro-cap land and am experimenting to see how I do and whether I can trade successfully in this space. Part of the reason I have looked into these further is there is a great lack of coverage of many of these stocks with little institutional following which creates greater inefficiencies in stock valuation. This is more obvious on small-cap stable dividend payers but is also true of the start-ups who are executing their business brilliantly even if the market isn't buying it yet (ie. MQL, CTW, GFS) or has bought in hard but now selling off gains (RGX, IMUC.OB, AD). I have 10% of my portfolio in such names and won't be buying anymore without selling something first and I am happy with this alotment of micros and small caps for now.


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## KaeJS (Sep 28, 2010)

$13.99...


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## moneyisfornothing (Feb 18, 2012)

PMREdmonton said:


> Yes, I'm extra cautious when I buy or sell an option on IB.
> 
> I have a large amount of cash sitting idle and I don't tend to have a lot of puts open at one time - just 2 or 3, usually. Right now I have on GG strike at 40 for May. I am trying to sell one for TEF at 15 strike for June at 1.60. I have no other put sells open. I do have a couple of covered calls open for BALT, HIG and GG. One just got called away today on DTV.
> 
> Maybe next year I'll be doing more option writing as a routine way of smoothing out my returns a bit and perhaps I'll get into more exotic things but I'm still learning about things like implied volatility and theta decay and then all the exotric strategies like dividend capture, strangles, collars, iron condors .... I'll leave consideration of those for next year once I wrap my head around how I react to options - you can always learn the mechanics of trades and what not but you don't know how you handle them until you have your money on the line. It took me a few years to progress from mutual funds to ETFs. Last year was the first year I bought stocks and mostly did large caps. This year I have ventured out more into the small cap and micro-cap land and am experimenting to see how I do and whether I can trade successfully in this space. Part of the reason I have looked into these further is there is a great lack of coverage of many of these stocks with little institutional following which creates greater inefficiencies in stock valuation. This is more obvious on small-cap stable dividend payers but is also true of the start-ups who are executing their business brilliantly even if the market isn't buying it yet (ie. MQL, CTW, GFS) or has bought in hard but now selling off gains (RGX, IMUC.OB, AD). I have 10% of my portfolio in such names and won't be buying anymore without selling something first and I am happy with this alotment of micros and small caps for now.


when do you practice your profession as a neurosurgeon if you do not mind me asking ya?
you are really very efficient.
TIA


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## Sherlock (Apr 18, 2010)

Bought some at 13.90. This is a bargain.


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## Earl (Apr 5, 2016)

This has been on a climb for a while now. But where is it going? Anyone else looking at it?


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