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Saturday, September 23, 2006

Is believing in God at odds with the goal of making money?

Had been busy trying to balance my personal, work and family lives. Finally, sat down today to continue writing my blog. Recently, read and article on the Yahoo Finance titled "God and Money?" The article talks about the beliefs among different religions regarding whether making money/profit is at odds with God.

Personally, I believe the belief in God is not at odds with the goal of making money. I believe one should make the best use of one's life while we are on earth, and use the money to make not only our personal lives better but to help other people who may be having problems. I believe that the more you use the money to help others, the more God gives you. In my view, God blesses people, who are good stewards of managing money, with more money so that they can use it to benefit others.

To that end, I am glad there are lot of people and organizations around the world that are doing their best to raise money for people in difficult situations. The two organizations I especially like are the World Vision and the Cancer Cancer Patients Aid Association (CPAA). World Vision lets you sponsor children from different countries and uses the funds to help those kids. CPAA is an Indian organization that uses the funds to pay for the treatment of poor people with cancer.

Among the people I admire the most are Bill and Melinda Gates. I admire how they use their wealth via their foundation to benefit people through out the world. I wasn't surprised when Warren Buffet trusted a huge chunk of his money to go to the Gates foundation after his death. As people, Bill and Melinda Gates are definitely my heroes!

Here's the link to the article from Yahoo Finance:

God and Money

posted by Ruby @ 12:44 PM 0 comments

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Monday, September 04, 2006

How Call Options Work?

In my last post, I mentioned about call options. So the question is what exactly are call options? Call options basically give you the right to buy the underlying stock at a certain predetermined price by a certain date. The predetermined price is referred to as the strike price while the date by which the rights must be exercised (or they expire) is referred to as the expiration date.

Thing to know is that you can purchase or sell call options. So far, I have only sold call options and that too only if I own a stock. These call options are referred to as covered calls since I already own the underlying stocks on which I have written call options. If you sell call options on a stock which you do not currently own, its referred to as naked call options. Selling naked call options can be very risky because if the underlying stock rises in price substantially above the strike price, you as a seller will still have to provide those shares at the strike price, even if that means that you have to first buy the stock at the substantially higher current market price. That's why I don't indulge in naked calls.

To see how call options work, consider an example. Assume I sell 10 contracts (each contract is equal to 100 shares) of call options on Microsoft on Sept 1, 2006 with expiration date of September 15, 2006 (options typically expire on the 3rd Friday of the month). Assume the stock is currently selling at $25 while my strike price is $30. Assume that the premium I get for writing 10 contracts is $0.20/share. So when I sell these options, I get $0.20/share * 1,000 shares = $200 minus say $10 for the brokerage commission (and of course, any taxes that I will have to pay on it), resulting in net proceeds of $200 - $10 = $190. So if by Sept 15, Microsoft stock stays below $30, I will be able to keep my existing 1,000 shares and in addition, get to keep the proceeds ($190) from selling these call options. Of course, if the stock price goes at $30 or above, then I will have to sell my shares at $30 to the buyer of the call options. So I will get $30 * 1,000 = $30,000 minus any brokerage commissions, taxes and other miscellaneous fee. In addition, of course, I still have $190 that I got by selling these call options in the first place.

So if I was planning to sell the Microsoft stock any ways at $30, then by selling call options on it, I can get an addition amount for it, assuming the stock price rises above the strike price. Of course, if the stock price of Microsoft stays below $30 by the expiration date, I get to keep all the net proceeds from call options -which isn't bad. On technology stocks, personally, I consider these proceeds as dividends and keeps my interest on these stocks.

A good article on options was published recently at theStreet.com; see the link below:

Options

As always, a final disclaimer: the purpose of my writings or this web site is not to give any financial advice nor make any recommendations. This site is just a blog of my activities, interests and thoughts. Trading options and stocks can be very risky, so you need to exercise your judgment and seek competent advice before investing in such instruments.

Labels: investing; invest

posted by Ruby @ 6:48 PM 1 comments

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"If you look at what you have in life, you will always have more. If you look at what you do not have in life, you will never have enough".
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