Exactly. If you are looking for that kind of div - but not expecting growth, then ....
They are not likely to go bust overnight - they have existing deals bringing in cash for the near future.
It does not imply the expectation 8 is going to do well, or that MS is going to make any inroads into the portable space.
It implies the expectation is the opposite.
Little lesson on how REAL markets work from an actual TRADE rather than "what you THINK the market is saying".
OK this is a Windows Forum but have you ever thought of SELLING OPTIONS -- you can make around 2 % a month without any problem -- that's 24% a year (conservative estimate)
For example you SELL a PUT on MSFT at say 27 for a premium of .25 expiry sometime in April / May doesn't matter.
The PUT says that at expiry (or any time before but 99.9999% of time shares won't be PUT to you until expiry) you are if the share price drops below 27 at expiry contracted to BUY the stock at 27 whatever the market price so ensure that there is sufficient "Margin" in the account to handle the case if you DO get put the shares. However if you are a careful trader this rarely if ever happens.
That means PER CONTRACT (100 shares) you get IMMEDIATELY into your trading account 100 * 0.25 = 25 USD -- for this type of share take 10 contracts as the minimum otherwise dealing costs (around 22 USD will swallow up profits) so that's 250 USD (called the Premium.
(Note you SELL not BUY the option. 90% of SELL contracts in any case expire worthless -- I.e you always KEEP the premiums whatever happens).
Now two days later MSFT rises so the value of the PUT contract falls -- there's much less chance of the shares falling to the STRIKE price (27 USD for example) so the value of the PUT contract becomes less -- say it's now dropped to 0.15.
So you CLOSE your trade by BUYING BACK your option -- now this costs 0.15 *100 = 15 USD per contract so on 10 Contracts that's 150 USD.
So your PROFIT after TWO days of trading is 250 - 150 USD = 100 USD -- say also 20 USD dealing costs -- as you've CLOSED an OPEN position you only pay ONE set of costs so you've made 80 USD.
You even didn't have to use use any capital !!! that's just PURE POCKET MONEY. Note at a PUT SELL OPTION you DO NOT HAVE TO BUY THE STOCK (unless it's put to you of course but this is very very unlikely).
Conventionally the total "Money at risk" would have been your potential liability for 1000 MSFT shares at 27 = 27,000 USD - 250 USD (that's the premium you've got) so 26,750 -- most people forget the premium -- even if the shares went to ZERO you still keep the 250 USD so the MOST you have at risk is NOT 27,000 but actually 26,750. I argue this fact nearly every day with traders. !!!!!
Your % gain IN TWO days including dealing costs is (80 / 26500) * 100% = .3%
so even that amount in say around 150 trading periods is .3 * 150 = a whopping 45%. Try that in a Bank.
What you do at this game is take SMALL profits but nearly every day and in almost three years of doing this I can only say that Shares have been put to me only TWICE and even here it's not a disaster as you SELL a CALL option -but that's for another day.
Anyway --end of lesson one in Options trading -- remember I'm SELLING not BUYING options which invarioubly lose although profits can be HUMUNGOUS -- Pension funds etc do most of the BUYING of options.
Here's a little spread sheet for future options of MSFT. REAL DATA taken from from the CBOE. (Chicago Board of Options Exchange where this trading is done).
Look at the MSFT132720OP-27
(MSFT PUT year 2013 strike price 27 expiry 20 month P = PUT / APR).
Month codes shown in scr shot.
So there's still a load of money to be made out of Ms yet.
With pleasure !!
Some people pay a FORTUNE for lectures on this stuff -- actually its very easy -- most people are too scared to look at this and wonder why their money doesn't do anything at 0.25% in a Bank while the same Bank that takes 4 days to transfer money from Account A to Account B actually does this type of trading with YOUR money for the 4 days that the money is "in transit".
As I come up near retirement I'm looking for "other income streams" - and as I LIKE teaching -- often given Evening Classes / demos etc etc I might go in for this more now -- fortunately as we (Is) are outside the EU (still - just) I don't have any problems opening a US trading account and trading on the US Markets.
Anyway have a good evening and I still can't believe how many pages this thread has run to.
Bunch of cows...
Business is riddled with this type of stuff -- How much money did Tommy Flowers ever get (old British Post Office) for actually BUILDING out of his own money electronic switching circuits which made computer hardware possible. -- It's fine when Alan Turing etc can theoretically describe properties of what computers should have and how they operate -- but someone actually has to BUILD the hardware to convert this stuff into reality.
Tommy Flowers - Wikipedia, the free encyclopedia
Alan Turing - Home Page
History of Computers - Microsoft's First Operating System MS-DOS
Another case is SAP - another HUGE software giant -- founded by some disgruntled ex IBM employees.
History 1972-1981 | Company Information | About SAP AG | SAP