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Selling price advice for my Qualcomm shares

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TheMotorcycleBoy
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Selling price advice for my Qualcomm shares

#182587

Postby TheMotorcycleBoy » November 23rd, 2018, 5:10 pm

Hi Folks,

A couple of times a year my US employer (Qualcomm) gives us share options (I don't the exact terminololgy), i.e. regular QCOM shares lodged at a Stateside broker called ETrade. Qualcomm and ETrade between themselves "handle" the tax, fees and currency exchange on our behalf. Anyway, once upon a time, I would just sell the shares ASAP and bring the £££ back to my bank account. Of late, my and one or two colleagues, have speculated and set sell-limits and waited to see if the market would be kind to us. Back in the summer I hung around waiting for the price to move from $50 upwards and then they sold when they hit $60. (My mate was even jammier and his last ones went through at $70 back in September).

Anyway, we all have another grant which has vested, but now the US markets seem less bullish, so I'm umming and ahhing as to what to do. The NASDAQ and the S&P seemed to peak around October, and post the midterms it seems that DJT's tax cut "stimulus" and his resistance to Fed rate rises will be suppressed what with the Dems in the House.

My situation vis-a-vis my current grant, is that I don't want/need the cash ASAP (else I'd have already sold), however I'd like to cash the shares within the next couple of months.

So....when to sell, and whether to set a sell limit or not, and at what price. I see now QCOM are trading at about $55, and the freebie marketscreener

https://www.marketscreener.com/QUALCOMM-4897/consensus/

seems to reckon 27 analysts are providing an average target of $68 (whatever that means!!).

So I'm wondering what people on TLF who know much about the US market and mature US tech (such as Qualcomm) think I should do. Like I say, I'm not desperate for the loot, but will hang on to the stock for another couple of months if Mr. Market is prepared to temporarily move the price up.

However given the midterm US elections, and the weaker "global growth" forecasts I'm thinking that setting a sell-limit for anything greater than $60 again might be foolhardy. But I would welcome your opinions, someone on here may have a good reasoned guess of way things are heading Stateside.

Matt

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Re: Selling price advice for my Qualcomm shares

#182607

Postby Lootman » November 23rd, 2018, 6:34 pm

Do you have an ETrade account then? If so, you could consider selling call options against your position, as I know ETrade allows options trades. So for instance instead of setting a limit sell order for $60, you could sell a 60 call option and get paid for essentially the same outcome.

For example right now with QCOM trading around $55, you can sell the January 2019 60 calls for about 71 cents. If I assume that you have 1,000 QCOM shares (face value about $5,500) then you would receive $71 for those 10 calls, or a little over 1%. Then in January either you sell at 60, and pocket $6,071 in total. Or QCOM closes below 60 at January expiration and you keep the $71, whereupon you can write more calls.

To boost the premium you could go out further - the January 2020 60 calls will net you about $440 for those ten contracts. Or go closer to the money - the January 2019 55 calls gets you $240. That's over 4% in 2 months, reflecting the higher probability that you will be called away.

QCOM is volatile so selling options can be a good way to play it.

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Re: Selling price advice for my Qualcomm shares

#182659

Postby TheMotorcycleBoy » November 24th, 2018, 8:30 am

Lootman wrote:Do you have an ETrade account then? If so, you could consider selling call options against your position, as I know ETrade allows options trades. So for instance instead of setting a limit sell order for $60, you could sell a 60 call option and get paid for essentially the same outcome.

For example right now with QCOM trading around $55, you can sell the January 2019 60 calls for about 71 cents. If I assume that you have 1,000 QCOM shares (face value about $5,500) then you would receive $71 for those 10 calls, or a little over 1%. Then in January either you sell at 60, and pocket $6,071 in total. Or QCOM closes below 60 at January expiration and you keep the $71, whereupon you can write more calls.

To boost the premium you could go out further - the January 2020 60 calls will net you about $440 for those ten contracts. Or go closer to the money - the January 2019 55 calls gets you $240. That's over 4% in 2 months, reflecting the higher probability that you will be called away.

QCOM is volatile so selling options can be a good way to play it.

Hi Lootman,

I have do have an Etrade account, but I know off hand that it's quite a restrictive one designed specifically for employee-granted shares. So I'm not sure about whether or not I'll have a cost-effective way of employing call options with my setup. Definitely worth asking them - their net-chat service is very good.

Yes, you are right, QCOM are reasonably volatile, that's why I'm fairly confident that they could hit $60 in a few months.

I want to thank you for putting together the figurative example above - but to be honest I didn't quite follow it....:( i.e. surely 1000 QCOM @ $55 = $55,000 total value? And then I didn't quite follow where you got the 60 calls and then 10 calls from exactly.

FWIW, I have 58 QCOM vested at this moment. What I may do is for now is set up a sell-limit (which I think I can cancel whenever I choose), and then spend some time researching exactly how these call options work.

many thanks
Matt

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Re: Selling price advice for my Qualcomm shares

#182683

Postby Gengulphus » November 24th, 2018, 11:45 am

Not selling price advice, but when I was employed by a UK company and owned shares in it (I'm retired now), I was subject to a code of conduct about my dealings in them. I don't remember details about that code of conduct, but the general impression that I've retained is that one of its aspects was basically 'keep it simple' - use of options and other derivatives seemed against at least its spirit. Things are obviously different for your case, at least with regard to your employer being a US company and very likely other things as well, so I'm not saying there's any problem with you using options if you want - but it might be worth checking!

Gengulphus

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Re: Selling price advice for my Qualcomm shares

#182698

Postby Lootman » November 24th, 2018, 1:17 pm

TheMotorcycleBoy wrote:I want to thank you for putting together the figurative example above - but to be honest I didn't quite follow it....:( i.e. surely 1000 QCOM @ $55 = $55,000 total value? And then I didn't quite follow where you got the 60 calls and then 10 calls from exactly.

FWIW, I have 58 QCOM vested at this moment. What I may do is for now is set up a sell-limit (which I think I can cancel whenever I choose), and then spend some time researching exactly how these call options work.

I made a mistake - the dollar numbers I used are for 100 shares, not 1,000, i.e. $5,500. Apologies. The percentage numbers remain the same however.

By "60 calls", I meant the strike price was 60 and not that there were 60 of them. The "10 calls" should have read "1 call (contract)" reflecting 100 shares.

That said, options only work in lots of 100 shares at a time, so with 58 shares you can't use them anyway, whereas you can use a limit order..

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Re: Selling price advice for my Qualcomm shares

#182719

Postby TheMotorcycleBoy » November 24th, 2018, 3:15 pm

Geng and Lootman,

Thanks for the advice. I think I'll probably start off with a limit order at $60/share, and just read the Stateside forecasts for the meantime and see what the general tone is and adjust if necessary.

Matt

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Re: Selling price advice for my Qualcomm shares

#182725

Postby Lootman » November 24th, 2018, 3:33 pm

Gengulphus wrote:the general impression that I've retained is that one of its aspects was basically 'keep it simple' - use of options and other derivatives seemed against at least its spirit.

You may well be correct about that but options can be to reduce risk as well as to speculate. As such, I think a person would be disadvantaged if they took that provision too literally and never used options.

I am reminded of that because a colleague of mine had a very large award of stock options (again in his US employer). The options were not yet vested so he could not sell them. But it was a a high value award and he planned to buy a house with the proceeds once they vested. Sadly before the vesting, the dot com crash happened and the value of his stock options fell to an amount that was a small fraction of its former value.

He could have hedged that risk by buying put options with a strike price close to the market price and with the first expiry date after the vesting.

And in fact since that options trade would not be in any way connected with the unvested stock options, it really could (or at least should) not be considered as violating the provision that you cited at all.

But it depends on exactly what the rule was. A number of my employers put restrictions on what I could trade, with a complete ban on my trading any security that my employer had a relationship with. And at the time I was not allowed an account with another broker either. Even my wife was not supposed to have one, although I got a special exemption for that, by application. So you are quite right to draw attention to such things.

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Re: Selling price advice for my Qualcomm shares

#182878

Postby Gengulphus » November 25th, 2018, 7:48 pm

Lootman wrote:And in fact since that options trade would not be in any way connected with the unvested stock options, it really could (or at least should) not be considered as violating the provision that you cited at all.

But it depends on exactly what the rule was. A number of my employers put restrictions on what I could trade, with a complete ban on my trading any security that my employer had a relationship with. And at the time I was not allowed an account with another broker either. Even my wife was not supposed to have one, although I got a special exemption for that, by application. So you are quite right to draw attention to such things.

As you say, it depends on exactly what the rule was. In my case, I do remember that the code of conduct covered all my dealings in my employer's shares, regardless of how I obtained them, and including options, CFDs, and other derivatives. It also covered the dealings of my 'connected persons', though IIRC it was only that I should do my best to get them to adhere to it as well - which would of course have been all I could do anyway! So it definitely would have covered any attempt by me to use options to protect my holding's value, whatever opinion one might have about whether it should have done...

I don't remember exactly what restrictions it imposed, beyond that when I wanted to deal in my employer's shares (which was all I ever did want to do), I had to ask for permission and if I got it, the permission only lasted fairly briefly, IIRC until the end of the following day. I only failed to get it once, and that was a memorable occasion because my employer announced a major deal about a week later. I definitely had had some insider information about that deal when I asked for permission, without realising I did because I'd missed a rather obvious implication of stuff I knew, basically by focussing on dealing with some technical queries I'd been asked and not thinking about who I'd been told wanted the answers. If I'd been allowed to trade and done substantially better by trading before the deal was announced, the story that I simply hadn't realised those implications would have seemed very thin, even though it was true...

Gengulphus

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Re: Selling price advice for my Qualcomm shares

#182938

Postby TheMotorcycleBoy » November 26th, 2018, 5:43 am

Gengulphus wrote:I don't remember exactly what restrictions it imposed, beyond that when I wanted to deal in my employer's shares (which was all I ever did want to do), I had to ask for permission and if I got it, the permission only lasted fairly briefly, IIRC until the end of the following day.

I think that it's different nowadays Geng. I'm not wishing to imply that you are a lot older than me though! :lol:

My employer and many others use regular share offerings either en masse as retention mechanisms, or as part of one's "performance related pay". As such bonuses are often part cash, part stock, and certainly in my case (and in my last employment) the stock can be sold or kept as soon as it "vests".

I'll have to do some research into the viability of call options in my case, but for now I'll stick with setting up a sell limit order, but for the determination of it's price, I think I'll have to toss a coin!

Matt

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Re: Selling price advice for my Qualcomm shares

#183263

Postby Gengulphus » November 27th, 2018, 1:59 pm

TheMotorcycleBoy wrote:
Gengulphus wrote:I don't remember exactly what restrictions it imposed, beyond that when I wanted to deal in my employer's shares (which was all I ever did want to do), I had to ask for permission and if I got it, the permission only lasted fairly briefly, IIRC until the end of the following day.

I think that it's different nowadays Geng. I'm not wishing to imply that you are a lot older than me though! :lol:

Well, I said earlier in the thread that I'm retired now, so that's probably more a matter of not wanting to imply anything about your own age than about mine! ;-)

But a bit more seriously, I think it's at least as likely to be a matter of different employers as one of different times.

Gengulphus

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Re: Selling price advice for my Qualcomm shares

#183269

Postby TheMotorcycleBoy » November 27th, 2018, 2:24 pm

Gengulphus wrote:
TheMotorcycleBoy wrote:
Gengulphus wrote:I don't remember exactly what restrictions it imposed, beyond that when I wanted to deal in my employer's shares (which was all I ever did want to do), I had to ask for permission and if I got it, the permission only lasted fairly briefly, IIRC until the end of the following day.

I think that it's different nowadays Geng. I'm not wishing to imply that you are a lot older than me though! :lol:

Well, I said earlier in the thread that I'm retired now, so that's probably more a matter of not wanting to imply anything about your own age than about mine! ;-)

Ha! Yup, I'm in it for a few years yet mate.

Anyway, I've got the QCOM shares (I got 99 to sell in the end it transpired) set up now. I set a sell limit for 60 days at $60. And I'm forcing myself not to look at the current price, just waiting for a surprise email from the broker.... ;)

Matt

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Re: Selling price advice for my Qualcomm shares

#184500

Postby TheMotorcycleBoy » December 3rd, 2018, 2:49 pm

My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

:)

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Re: Selling price advice for my Qualcomm shares

#184506

Postby simoan » December 3rd, 2018, 3:13 pm

TheMotorcycleBoy wrote:My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

:)

Yes, I saw China agreed to not block another bid for NXP. Of course, Qualcomm are also unliked in China (and elsewhere) because of their dubious IP practices and things could be easing up on IP rights in China. Anyway, think of all that extra debt used in buying NXP at (or near) the top of the market, even more reason to sell because IMHO NXP is a crock!

Si

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Re: Selling price advice for my Qualcomm shares

#184533

Postby TheMotorcycleBoy » December 3rd, 2018, 5:11 pm

simoan wrote:
TheMotorcycleBoy wrote:My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

:)

Yes, I saw China agreed to not block another bid for NXP. Of course, Qualcomm are also unliked in China (and elsewhere) because of their dubious IP practices and things could be easing up on IP rights in China. Anyway, think of all that extra debt used in buying NXP at (or near) the top of the market, even more reason to sell because IMHO NXP is a crock!

Si

I think QC are currently cash rich - or at least they were before they started their massive buy-back campaign.

Yes I'd rather they don't try to participate in NXP again......it would be a total waste of $$$ in my opinion. But who knows? I just work there!! For now.....

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Re: Selling price advice for my Qualcomm shares

#185447

Postby Lootman » December 7th, 2018, 5:04 pm

TheMotorcycleBoy wrote:My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

You did well - it is now back down around $56.50.

Your experience was almost a textbook example of how a limit order can work, as QCOM was only at or above $60 for a very short time when it gapped up at the market open on that day, followed by a swift fall back.

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Re: Selling price advice for my Qualcomm shares

#185529

Postby TheMotorcycleBoy » December 8th, 2018, 9:15 am

Lootman wrote:
TheMotorcycleBoy wrote:My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

You did well - it is now back down around $56.50.

Your experience was almost a textbook example of how a limit order can work, as QCOM was only at or above $60 for a very short time when it gapped up at the market open on that day, followed by a swift fall back.

It was very flukey. I believe that on Tuesday, DJT was tweeting again:

https://twitter.com/realDonaldTrump/sta ... 2724980736

and it went into reverse.

I must admit I really like the impersonal aspect of using limit orders. I'm using them a lot for buying too these days. But, then again, I guess you people have been exploiting these volatility features for years.

Matt

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Re: Selling price advice for my Qualcomm shares

#216892

Postby TheMotorcycleBoy » April 23rd, 2019, 7:11 pm

simoan wrote:
TheMotorcycleBoy wrote:My sell limit order has just been hit at $60:

Ticker symbol: QCOM
Number of shares: 99
Sale Price: $60.230000

I remember first thing on Radio4, some mention of slight trade rapproachement, and the stock rose 2.5% on the first few minutes of the market opening.

:)

Yes, I saw China agreed to not block another bid for NXP. Of course, Qualcomm are also unliked in China (and elsewhere) because of their dubious IP practices and things could be easing up on IP rights in China. Anyway, think of all that extra debt used in buying NXP at (or near) the top of the market, even more reason to sell because IMHO NXP is a crock!

Si

Well they are kickin' ass now:

https://stocknews.com/news/qcom-morgan- ... e-to-rise/

eagerly waiting for our next bung :D

I hope they don't screw things up before with another bid on an "increasing share-holder value M&A" :roll:


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