Ask Rande

Top 1739. Aug 11, 1999 8:00 PM

» TONYBRIG - Have to get the exact wording

Have to get the exact wording
Hope I can find that Barrons paper around here.
Otherwise its the library I go.
They hate me there cause my cell phone keeps
ringing.

vbolhh

-- posted by TONYBRIG

Top 1740. Aug 11, 1999 8:43 PM

» JenL_3 - Barrons

Tony - If you know the section of Barrons or the author, let me know, and I can post an excerpt from the article in Barrons Online....Jen

-- posted by JenL_3

Top 1741. Aug 11, 1999 9:17 PM

» matttheduck - article request

rande - would you be interested in authoring an article for my newsletter on the tax aspects of daytrading? we mail to about 2,500 business and political leaders in oregon. you can scope more at http://www.teleport.com/~otr

deadline and length are at your convenience. quack

-- posted by matttheduck

Top 1742. Aug 11, 1999 9:24 PM

» Phish - IRA stock account question

Rande, Kirk, anyone,
I've been nibbling on stocks for the long term and I'm now realizing that I should be putting $2000 of that into an IRA, right? (The majority of my retirement $$ goes into my 457, but I can't buy stocks in that account.)

I think a Roth IRA would be best for me, but I'll do thge math first. I assume that I can own individual stocks in a Roth IRA,right? What about the trade fees? Do they get deducted from the account? Or can I pay them from other money?

Better yet, does anyone have a good link?

Thanks,

-Randy

-- posted by Phish

Top 1743. Aug 12, 1999 5:31 AM

» RandeS - Randy,

Randy,

You can certainly trade stocks in a Roth IRA. Your commissions are added to purchase price and subtracted from proceeds, as always, so your transactions are "net." As far as adding additional money, you are limited to $2,000 per year in contributions, provided you meet the AGI eligibility requirements. The positives of using the Roth for trading are avoidance of short-term capital gain taxes up front and tax-free withdrawal on the back end. The downside is not being able to offset other taxable gains as you could in a regular pesonal account (or ordinary income up to $3,000 in excess of any year's gain offset with an unlimited carryover to subsequent years for any unused losses). If you're talking about daytrading, given the odds of generating successful trades on an ongoing basis over a long period of time without net losses, this could be a problem. The Roth is still great for taxable fixed income investments, high-turnover or dividend paying stock mutual funds, etc. and can work well if you find yourself wanting to take short-term gains on individual stocks. For equity index investing and long-term buy-and-hold of individual stocks, I personally prefer to use personal, non-deferred accounts. Tax efficient already and only subject to long-term capital gain rates at the back end. Still, since the Roth is tax-free and not tax-deferred, you can make a case for just about anything in the Roth. Check with Schwab (or other discount broker) for the requirements of opening an account, what you can trade, and the contribution limitations.

-- posted by RandeS

Top 1744. Aug 12, 1999 5:38 AM

» RandeS - matttheduck,

matttheduck,

Thanks, but my plate's pretty full for now. I did an interview awhile back for a Fortune article on tax aspects of daytrading (see April 12, 1999 issue, "To Pay Your Taxes, First Define 'Day Trader'"). But, one of the best sources I've seen is at: http://www.tradertax.com/

They specialize in this area and appear to have some pretty good resources. They might be willing to do a piece for the exposure.

-- posted by RandeS

Top 1745. Aug 12, 1999 5:59 AM

» TONYBRIG - Barrons

Jen:

Will try to get the article name/author
Thanks!

Rande:

You once showed some kind of Option Formula here
do you have an easier version that I can use
to analyze future Option Prices?
Specifically Im interested in tracking and dealing
in Intc Jan 90 call symbol INQAR. How can I determine if it is over/under priced based on
its current price and date?
I sold 6 calls at 3 and its now 4.
But my stock keeps going up and they will take
it from me at 90. Which aint too bad since Im in at 60. But I'd hate to lose it at 95 in Jan.
Also who decides how high to set the Option strike prices and why?
For instance Intc's highest is 90 for Jan year 2000. Is that the Phil excahange I should check with?

vbolhh

-- posted by TONYBRIG

Top 1746. Aug 12, 1999 6:02 AM

» RandeS - Retail sales came in with a .

Retail sales came in with a .7% increase -- nearly double the overall estimates. So, why is he bond market still up? Easy. The details continue to show that nondurable goods are not that strong. The numbers ex-gas and autos shows a rise of only two-tenths of a percent. May and June have also been revised downward. The numbers won't keep the Fed from raising interest rates later this month (we still have PPI tomorrow and CPI next Tuesday as well), but not as dire as they might appear on the surface. Elsewhere, jobless claims were up 4,000.

At the risk of really being labled a Pollyana, I'm feeling somewhat optimistic about the third leg of the Treasuries refunding today. Since the feds have cut back on the 30-year auctions and come out with their planned buy-back strategy beginning next year, the long-bond should be well met. Especially after the favorable tone of the 10-year auction yesterday. We shall see.

-- posted by RandeS

Top 1747. Aug 12, 1999 6:07 AM

» RandeS - Tony,

Tony,

I'm sorry, but there is no "easy" formula for pricing options that I'm aware of. The Black-Sholes and the Binomial models are fairly complex. Nobody outside of a graduate finance class does these calculations by hand of course, but even the necessary inputs for a computer modeling can be tricky -- volatility, risk free rate, etc. If you have access to a Bloomberg terminal, it's fairly simple to punch it out if you know what you're doing. But to be honest, this is fairly specialized stuff and the vast majority of brokers will certainly refer to their firm's derivatives desk.

-- posted by RandeS