Google crashing in after hours

Google's stock is crashing in after hours after reporting stellar but not stellar enough earnings. The stock was down as much as 16% in after hours trading. Currently, its down about $55. Tomorrow, several billion dollars of the American public's wealth will appear to go into thin air. However, the truth is that this money went from the public to the insiders and early investors in Google in the first two years after Google's IPO. Caveat emptor. The stock had a small move for those who bought today, however, for the people that invested in the options, tomorrow should be a profitable day for those who invested in call and put options or were bearish on the stock and only had put options.

WWWFinance - Option Valuation: Campbell R. Harvey

WWWFinance - Option Valuation: Campbell R. Harvey

Options Profit Analyzer

Options Profit Analyzer: "Options allow investors the right to buy or sell a stock at a certain price. Although they are the most risky investment vehicles available, with the potential to lose all of your capital, they can provide great returns on small investments. An option to buy a stock at a certain price is a 'call', while an option to sell a stock at a certain price is a 'put'. The specified price is the 'strike price'. Options expire on the third Friday of each month. At this time, the owner of the option can excercise the option's right or it will expire worthless. People invest in options to gain the underlying right, or they speculate on the value of the option increasing before the option expires. The value of the option depends on the price of the underlying stock, the time remaining before expiration, and market psychology. The 'intrinsic value' of the option is price difference between the strike price and the underlying stock's price. An option to buy a stock at $40 when the stock is trading at $45 would have an intrinsic price value of $5. The 'premium' of the option is the price above its intrinsic value. The premium is directly related to the time remaining before expiration. An option is worth more with plenty of time before expiration, and its premium decreases as the option expiration date approaches. Market psychology can also increase the premium of an option. Stocks with bullish sentiment can carry higher premiums on call options at any price above the current stock's price. Premiums are a market driven value.
The significant risk of options is that they can become worthless if they expire 'out of the money'. An option to buy a stock at $50 when the stock is trading at $45 would be worthless upon expiration. All of an initial investment can be lost.
Options Profit Analyzer is a calculator based only on the option's intrinsic value. It does not factor in premium costs since premium is determined by the people of the market. The profit is based on a person buying an option at low price and selling it at a higher price before the option expires. Options are sold in contracts, with each contract representing 100 options. Here's how the Options Profit Analyzer works. This calculator can calculate for puts and calls. To calculate profits for a call option, place a higher expected stock price than the strike price. To calculate profits for a put option, place a lower expected stock price than the strike price. "

'India Everywhere' in the Alps - New York Times

'India Everywhere' in the Alps - New York Times: "The question is whether India's unspoken message - that it is another China - is credible. After all, China still grows faster than India, has attracted 10 times the foreign direct investment and has built a gleaming network of airports and highways that make India look ramshackle."

Great trade on Google's drop

A put option to sell Google shares at 420 was available for a nickel prior to Friday, January 20, 2006. On that day, GOOG dropped from 440 to 400. So, to put this in perspective, one could have bought ten contracts representing 1000 shares for $50. By the end of the day, the value of each of those options was worth at least $20, since the stock had sunk to $399. The value of those ten contracts for the right to sell 1000 shares of Google at 420 went from $50 to $20,000.

Light Reading - VOIP - Google Is Overvalued - Telecom

Light Reading - VOIP - Google Is Overvalued - Telecom: "Google's current valuation - about $130 billion - assumes hypergrowth of both revenue and profits for many years into the future (62% compound annual growth rate to January, 2011, by my calculations). "

A great technical article about Google's current and future valuation.

10 Hot Techs That Aren't Apple or Google

10 Hot Techs That Aren't Apple or Google
Great article about tech stocks that are poised to move up.

TXN trading range

TXN is moving between 31 and 34. It's a good opportunity to make a short term ten percent gain or to make bigger profits with a call option at 30 or 35. The resistance level around the high 34s will take a while to break. Analysts price estimates are around 37. Positive news from TXN or an analyst upgrade would move the stock upward; otherwise, the stock doesn't appear to be able to reach higher levels by trading alone. Another factor holding the stock back is the reelback in the market recently. The price of Texas Instruments has also dipped below the 50 day movig average for the first time in two months.

thinkorswim Home - Stock Option Investing - Stock Option Trading - Online Trading Stocks and Options

thinkorswim Home - Stock Option Investing - Stock Option Trading - Online Trading Stocks and Options

Dueling Fools: Options Bull [Fool.com: Commentary] January 12, 2006

Dueling Fools: Options Bull [Fool.com: Commentary] January 12, 2006: "'Options don't lose people money. People lose people money.'"

CSCO moving up to 20

Cisco has been moving up well from 17.50 this past week based on positive analyst sentiments. The stock looks like it will reach 20 by next week. A call option on CSCO at 17.50 would profit nicely from the current small move from 18.97 to 20.

Google - Week in Review - New York Times

Google - Week in Review - New York Times

txn stalling

The stocks currently around the low 32 mark, but I think it can rise back to the 35 range soon. The current lull in price is due probably to some year end sellers and other people who are taking profits after the stock went from 27 to 34. After this round of selling is done, TXN will get back to 34-35 in early January 06.

Take It From Japan: Bubbles Hurt - New York Times

Take It From Japan: Bubbles Hurt - New York Times

An article about the aftermath of the Japanese real estate bubble and bad loans

a reminder of Japanese real estate

During the 80s, Japan's burgeoning economy led to a spectacular rise in real estate prices. This was shortly followed by a dramatic decline in prices. The problem that existed afterward was that many people were burdened with large loans on property with decreased value. In cities, families were living in small appartments because they have a large loan and can not sell their appartments for a substantial loss. This can happen here also. Already, appartment and condominium prices in cities have increased dramatically in the last decade due to low interest rates and other factors. House prices have increased in the surrounding suburbs and even rural areas of America have noticed house increases. Towns with a population of 30,000 have house prices unheard of ten years ago. As interest rates rise, house prices can drop since people are not willing to take on large loans with a high rate. This leaves previous buyers with a large loan and a loss in value of their property. For the economy as a whole, residents would be making payments on their homes and less money would be available for spending.

House prices are too high

It's getting difficult to sell homes in this market. Appears like prices are getting to be too high for buyers. Prices even in the rural south and midwest have increased by 100,000 over the past few years. This reminds me of the housing boom and bust in Japan about twenty years ago. People were locked into large loans for small houses. People will still spend money on improvements for their home to improve its market value.

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Investing in India

This is from an old article.

If you're trying to invest in India from America, you might have reognized that your options are limited or non-existent. India is the world's second most populated country with roughly one billion people. In addition to its population, its economy has also recently emerged as showing incredible growth. As of 2003, the country's GDP (a measure of its economic output) is growing at a rate of seven percent. Despite this growth, only two stocks allow you to invest in Indian companies from America: the India Fund (Ticker IFN) and the Morgan Stanley India Investment Fund (Ticker IIF). Both of these are exchange traded funds (ETFs). They are basically mutual funds that trade like stocks during the day. More information can be found at a good source for ETFs the ETFConnect website.
The website provides basic information like the fund's objective, its historical performance, and its top holdings in India.
One of the things to keep in mind when investing is the fund's premium or discount. Since you are buying a share of a group of holdings you may not be paying the actual worth of the holdings themselves. When an ETF is trading at a premium, the price of an ETF share is actually more than the value of the underlying assets. At a discount, the opposite is true. The ETFConnect website shows you the stock's recent permium or discount on the upper left. As of December 26, 2003, IIF is trading at a significant premium, and IFN is trading at a smaller premium.

12/26/2003

Tobacco's effect on US healthcare

The US spends about $1 trillion dollars a year on healthcare. From limited experience looking at the patients admitted to hospitals, at least ten percent of the nation's healthcare expense is spent on treating the side effects of tobacco smoking: chronic obstructive pulmonary disease, lung cancer, heart attacks, pulmonary embolisms, etc. For a closer impact, when waiting for hours in the ER to get seen by a physician, that physician is probably taking care of 2-3 patients with conditions related to cigarette smoking.

Inverted Yield Curve

http://www.nytimes.com/2005/12/18/business/yourmoney/18stra.html

NY Times story about inverted yield curves predicting recessions.

Where did all the money go?

As Google's price has stabilized after a large run up in the last two months, this stock's history is reminiscent of many other internet stocks from years ago. As the stocks become overvalued, insiders sell their stakes and create vast fortunes for themselves, as expected for people who have worked and created this company. Other people making money include those who invested early after the initial offering. If a stock goes up steadily and keeps the trajectory as the company delivers good news over time, this situation would benefit everybody. In the past, stocks that have risen dramatically have left late investors holding large losses.