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Meeting Agenda

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Receive $17,932 cash ($179.32 closing price) Hold your short position in AAPL for one month ... Sell or short-sell stock when price falls to certain price ... – PowerPoint PPT presentation

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Title: Meeting Agenda


1
(No Transcript)
2
Meeting Agenda
  • Recap / Updates
  • Short-Selling
  • Stop Stop-Limit Orders
  • Price-Earnings Ratio
  • Discussion
  • Contest
  • Closing

3
Recap / Updates
  • Location
  • Group Investment Funding

4
Short Selling
  • Selling a security you do not own
  • Borrow from broker to sell
  • Must be done in margin account
  • If you sell shares short, you hold a short
    position
  • Buy to cover shares returned to broker
  • MUST HAVE SUFFICIENT CASH/MARGIN TO RE-PURCHASE
    SHARES AT ANY TIME

5
Example
  • August 14, 2008 sell 100 shares of AAPL short
  • Receive 17,932 cash (179.32 closing price)
  • Hold your short position in AAPL for one month
  • Buy-to-cover 100 shares AAPL on September 14,
    2008
  • Cost to buy 14,984 (149.84 closing price)
  • Profit 2948

6
Stop Orders
  • AKA Stop-Loss Orders
  • Sell or short-sell stock when price falls to
    certain price
  • Buy or Buy-to-cover when price rises to certain
    price
  • Purchased at market price
  • Used to limit downside / protect gains

7
Stop-Limit Orders
  • Same as stop buy becomes limit order when stop
    reached
  • Must specify both stop and limit

8
Example
  • I bought 100,000 shares of SIRI in January for 10
    cents each (10,000 total)
  • Market price of SIRI rose to 16 cents by Feb. 5.
  • Price fell to low of 5 cents Feb. 11.
  • With stop at 15 cents 150,000 cash
  • Could then re-buy at 5 cents to get 300,000 shares

9
Price Earnings Ratio
  • Market price/annual net income per share
  • If company reported net income of 0.50 per share
    and trades at 4, P-E ratio is 8
  • Easiest means of stock comparison

Source Wikipedia
10
Which is more expensive?
  • DELL Closed 2/13 _at_ 9.12
  • HP Closed 2/13 _at_ 22.82

11
Which is more expensive?
  • DELL Closed 2/13 _at_ 9.12
  • HP Closed 2/13 _at_ 22.82
  • HPs P-E 4.88
  • DELLs P-E 6.65

12
Open Discussion
13
Contest Updates
  • Second last round of forms turned in next week!
  • Winner determined by market value March 1
  • New, longer contest starts at that time
  • Dont forget to turn in forms today
  • Names on forms
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