The gamecock. (Columbia, S.C.) 1908-2006, September 03, 1980, Page Page 10, Image 10
Wedne
Gettir
Playing the stock
as a recent USC
? ? a 1 sy 1 T
pictures uy tari jt
ANDY DLINN graduated
from USC in August with a
masters degree in mass
communications, since then
he has been sort of looking
for a job. Sort of, because for
the past two weeks Andy's
been playing the stock
market. He hasn't earned a
fortune, but so far he's made
enough to pay his rent and
expenses for the next four
months.
Andy dabbles in options.
The Stock investor
Buy priv
Instead of actually buying a
particular stock he buys the
option to buy someone's
stock. The amount he must
pay in the beginning, the
premium, is much smaller
than if he bought the stock,
and while the risk is greater,
so is the reward.
"It's a feeling. Timing is
w
every uuug. xueie is nu
objective reality. All the
work amounts to what you
feel the market is going to
do," Andy explained as he
studied the electronic board
with the latest stock
quotations rushing past at
Merrill, Lynch, Pierce,
Fenner x Smith Inc. in
Columbia. His eyes rarely
left the board as he talked,
w/thy/' . . / / / /. . . ' '
[ . fP;v. '
?w* ^
M&s :' J:
y
Stock market addict, /
tii/it\/ n f hie c tr\nis e nt
Stockholders must keep .
stocks because changes c
4 f
Vt ........... . ?>- ? -
ssday's
lg on tl
! market can be fun
graduate has found
iabcock.
watching for the stock he pei
had bought on option days
before. litt
If the stock coes down, hai
money will be lost. But that me
is the risk and the ex- /
citement. nei
"There are all kinds of ma
indicators of the market, pla
Business magazines, news ye<
reports, digests, just los
listening to what the other the
people are saying about the ba
market -- but in the end its a be<
ii?^? ad(
1
r's creed: stc
ha
ate and k&ll public. we
pl?
t
joi
0f
feel. The more you do the bu
better a feel you get, it An
comes with experience." un
Andy began investing in gr<
stocks when he was in the
Navy and had some extra v
cash. He bought 100 shares of th
McGraw-Hill publishing th
company and shares in ga
Virginia Electric and Power up
Company. He still has the to
McGraw stock but sold his
shares in the power com- th
pany when they began to lose se
mnnpv nf a fatiltv Un
nuciear plant. go
However, so far Andy has
made 16 percent on the
money he invested. "But in
that's nothing," he said, th
Some people I know have sa
made 200 to thousands of br
I pi
I ir
bi
I oi
$&<$% **
$2
Bp* '"
< <'. ; > ''>, * WlMWrrfMwHn ?
^
s
\ndy Dlinn chocks the ac7
the teletype machine. j*
a constant watch on their tj
an occur at any time. tl
Mk.
he Dc
and profitable,
out. Story and
rcents on their money.
'I'm a conservative. A
;le profit each day and I'm
ppy. You can't go broke
tking a profit."
Vndy concedes it can get
-veracking. He said one
in at Merrill-Lynch didn't
ly the market for two
ars because he had one
s and was terrified by the
?ught of another. He's
ck now, said Andy,
:ause the market is so
dieting.
Ever since he first bought
ir>lf in hie M avu rlotic An/In
> > aaau *1M T J UOJO
s been watching the
arket, but until the last two
;eks he's never had time to
ly the options game.
\lthough his degree is in
lrnalism, about 40 percent
his courses were in
siness and finance, which
idy said has helped him
derstand the market a
eat deal.
"You try to sell just before
e stock peaks. That way
e guy who buys it from you
imbles that it's going to go
>more than you are willing
bet.
"If you sell it at the peak
en you stand to lose
veral points as it begins to
> down before your sale
>es through," Andy said.
HIS STOCKBROKERS are
Charleston and for a fee
ey handle all his tranctions.
As with most
okers, an investor must
low proof he can cover any
irchases.
Like most investors, Andy
is an account with his
okers that pays a good
terest rate and which the
okers use to buy and sell
)tions as Andy directs.
It takes $5,000 to
>en an account, but it can
i taken as low as
:,000 .
"An account is the easiest
ay to handle it," Andy said,
rhat way there is no
ouble, everything is done
i .
Before deciding what
:ock to buy an option on,
ndy looks through
ublications and magazines
) get an overall feeling for
tie company and its
rospects. Then he calls his
roker.
He has two choices: the
roker can buy the option at
larket prices or at a fixed
rice. "I usually go with the
ixed price," Andy said.
Sometimes you can get
tuck if the price suddenly
umps on you on the market
loor."
After he calls his broker it
;ikes between lo and if)
ninutes to buy the option. On
he fifth day after the option
urchase Andy's broker will
ransfer the cost of the opion
from Andy's account to
Reseller.
>w Jon
"" . ' r= ZT 2^1 "it i' -4 ^,'r
Andy makes a call to his brok
a broker to sell can bring a stc
Thpn <?nm? fh?? vvnit Anri PP
the watch. Andy practically
lives at Merrill-Lynch
checking all the indicators;
the Dow-Jones and NY Stock
Exchange indexes and any
thing else he can think of
that will tell him the moment j
the option price has almost j
reached its peak.
He checks the electronic
ticker, the teletype with the
business news and the
Quotron, a visual display j j
terminal on which can be I
punched up everything you H
would ever want to know N
about any stock, and more. [ |
Constantly updated, it is the h i
investors' bible. It gives [ j
overall stock position trends J J
for foods, textiles, in- [ j
dustrials, specifics on [ j
buying, selling, asking, etc., j j
etc. It will tell you | j
everything except what | I
socks to wear the next day. j
Like tne otners patiently j
uioti inrr anH iiidf/iViinfl ir? tho f
YVU1V1110 UHU YTMtVlllllf, VIIV
Merril-Lynch lobby, Andy is
continually keying in his
stock on the Quotron to see
what the latest activity has
been.
Andy's calculator is never
far away as he constantly
figures the odds. The odds
are an intricate part of the
investors' business, and he
must know them absolutely
to survive.
At lunchtime everything
goes crazy, but Andy doesn't
worry. "It's the brokers
going to lunch, and the
figures aren't really ac
curate indicators until they _
return. I'm sure someone in { j
New York does it on purpose [ j
to drive investors across the M
country berserk," Andy i.-j
said. [
He likes it at Merrill- j
Lynch. "It's interesting to
hear the others talk It's a
cooperative here We are all H
small investors, and none of tc
us can influence the market, g
We're at it s mercy; we often is
tell each other if we see their tl
stock do something they may ir
want to know. w
"To be safe, utilities are g,
thr? Vtrxct l\f>t Thnv rwu Utu\{\
dividends, and their stock gi
certainly won't go clown in ai
the long run. However, to d
make real money you have tc
es pa
v-8
or. If made at the right tl
)ckho/der a lot of money.
How t<
option
Stocks are known as the p
as the secondary, which m
were to disappear tomorro\
a few stockholders may bl
suicides on Wall Street. ]
although a very profitable o
The option buyer agrees
for a certain price within nil
Within five days the buyei
the option. If at the end of
option to someone else, th
option - buy the stock at th
lose his option money.
There are two types of op
Andy buys) and puts. With <
the price for the stock is g
what he agreed to buy it foi
he sells his option to somei
the stock will go up even fu
the difference in the price
and the price he sold it for.
fins are me opposite, in
betting that the price of the
profit comes from selling
thinks it will decrease mor<
price of the option.
People who buy option
market and can make a g
how it works:
Assume that on May 1 th
Motors is selling at $50 a sh
August (the purchase or e?
for $5 a share. Now assume
stock has climbed to fc>6 a
August presumably becom
option is bid to $8 a share. I
option for $500 it could nov
$300 profit minus commissi
Compared to buying sto
looks like this:
DATE COST OF <
May 1 - bought $500
July 1-sold $800
gain $300
%return 60%
> go with the smallerrowth
companies, but that
; a risk As for options,
ley're riot for the beginning
_ \fAu 4 s\
vv.on/1 -- y \/u imvr IU MIUW
hat you are doing. Its a
amble all the way."
When Andy's stock has
otten as high as he wants -rid
it must on the average
limb at least 1/16 of a point
> cover the broker's fee - he
umll
y1""
I
'me, one phone call telling
o play I
game j
rimary market and options I!
eans if the options market I j
v a few brokers may weep, I j
ink, but there would be no
It is merely a sideline ~ j j
ne. H
to purchase so much stock 11
iafir rl o 1 ro
iwvj uajo.
r must pay the premium for
90 days he hasn't sold the
e buyer may exercise the
le agreed price -- or simply
>tions: calls (which is what H
:alls, Andy is gambling that
oing up. If it goes up from
r at the end of 90 days, then
Dne who thinks the price of
rther -- and Andy's profit is
he said he would buy it for
e buyer of the put option is [ |
stock will decrease, and his I
the option to someone who h
j than the original purchase I
is are speculators in the 1}
reat deal of money. Here's ji
e common stock of General I
are and that GM options for 5
tercise date) can be bought \ !
i that by July 1 the common 11
i share. The GM option for
les more attractive and the
f you had bought a 100 share
/ be sold for $800, making a
ons.
ck itself, options vs. stocks
OPTION 100 SHAKES
$5,000
$5,600
has two choices. He can have
the broker sell at a certain
point or have the broker wait
uuiii nnuv caiia in ciIhi su.ys
the magic word -sell
"1 usually call in since I
know exactly when i want to
let the option go. Again it
take about 10 to 15 minutes
for thp <nlp In 00 through
v"v Dv ? ?O-- *
Five days later, I collect the
money. What a life!"