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Financial People, Halp

Dr. Jones said:
That's a long answer. Here's the gist;

Example: let's say you think Apple is going to increase in price from a current $40 per share to $60 per share. You can purchase an option to buy the stock at the current price and pay an option fee rather than buying the whole $40 amount up front. Say, $4/share.

So let's say you have $10k in your retirement, you could take $1k and buy a call option of 250 shares of Apple. The stock rises to $60 as expected and you strike. You now buy/sell at $40/$60 and you now have increased your position from $10k to $15k and no taxes paid on the gains.

Here is how I do it, though.

Using same example. Instead of buying a call option on 250 shares, I will buy it for 2500 shares... even though I don't have enough money to buy the stocks when I strike. The stock raises to $60. Now my option is "worth" $20 x 2500 or a profit of $50k. I then sell my option for $40k and let some other person or firm make an immediate and easy $10k.

So I made a fast $40k.

Now, I actually don't play the market. Real estate is my thing.
So I find a deal on real estate, buy an option to purchase it, and then find another buyer that will pay me a nice profit to purchase my option.

Real example: I bought an option on a ranch for $5k. I then found a buyer that was willing to pay $1m more for the ranch than what I had negotiated. I sell him my option for $500,000. He gets a deal, I get a profit of $495,000 that is not taxed because it was profit earned from money in my IRA.
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Was this ranch already listed/up for sale or did you just approach the owner of the property out of the blue? I may have stumbled upon an opportunity in Montana. I need to approach it with tact but I have good reason to believe I could get a favorable price if I can spare the owners a headache. I still need to do some research on the area and get some more info (I just heard about this like 2 days ago). Any advice would be appreciated.
 
♪alt13 said:
Was this ranch already listed/up for sale or did you just approach the owner of the property out of the blue? I may have stumbled upon an opportunity in Montana. I need to approach it with tact but I have good reason to believe I could get a favorable price if I can spare the owners a headache. I still need to do some research on the area and get some more info (I just heard about this like 2 days ago). Any advice would be appreciated.
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The ranch in my example was not listed (which is better).
One way is to approach and say how passionate you are about the property and would love to try to buy it... But that you need a little time to get finances together/raise the money. Ask for a great price (because that's when you make your money) and for a, say, 90 day option to purchase. That's the loose version.. The lengthier version involves how to ensure no one can circumvent you.
 
Dr. Jones said:
The ranch in my example was not listed (which is better).
One way is to approach and say how passionate you are about the property and would love to try to buy it... But that you need a little time to get finances together/raise the money. Ask for a great price (because that's when you make your money) and for a, say, 90 day option to purchase. That's the loose version.. The lengthier version involves how to ensure no one can circumvent you.
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That's kinda what I figured. Honestly, I would be passionate about the property and if I could get the financing and run a viable ranch I would, but that may not be in the cards just yet. Would you have the property owner sing an NDNC or do you only do that with potential buyers?
 
Seriously Alt, I know Montana land and I wouldn't steal it from you. Depending on what you wanna use it for and other things, I could give you a hand. Hell, I might even know the people (I wouldn't say anything to them).
 
♪alt13 said:
That's kinda what I figured. Honestly, I would be passionate about the property and if I could get the financing and run a viable ranch I would, but that may not be in the cards just yet. Would you have the property owner sing an NDNC or do you only do that with potential buyers?
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Depends on the deal but typically just with buyer. Exceptions exist.
 
Dr. Jones said:
Yes. Most brokerages get squeamish doing this for folks that they perceive shouldnt be taking the risk.
Understandably.
There is risk because if the stock doesn't climb and you do not strike, you forfeit your option fee..

Like I said, I gave a very abbreviated version of how things work.
I believe you may have some possible unique circumstances that might lend itself to this... maybe I will PM when time permits.
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do the stocks only have a certain time period to go up?
 
Howard said:
Seriously Alt, I know Montana land and I wouldn't steal it from you. Depending on what you wanna use it for and other things, I could give you a hand. Hell, I might even know the people (I wouldn't say anything to them).
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Maybe it's your land? Think pops would take an option?
 
Cunning Linguist said:
do the stocks only have a certain time period to go up?
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Yes. It's negotiable. Obviously the longer your option the more your fee.
My aunt is senior exec for Merrill Lynch and she said she typically does 3 month option for 5% fee (of the current stock price), 15% fee for 6 months and a year will cost close to 50%.

That's why I do land. I can buy and sell/find a buyer myself and not reliant on too many outside forces.
 
Howard said:
Seriously Alt, I know Montana land and I wouldn't steal it from you. Depending on what you wanna use it for and other things, I could give you a hand. Hell, I might even know the people (I wouldn't say anything to them).
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Super early. I would say the chances of anything coming of it are like 10%(better than zero anyway). 1% I could buy it for myself. I'm going to politely show interest and gather details. Running a ranch/farm would be a dream come true for me. If I could make it work I will totally hit you up expertise and advice.
 
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