File 031818
Email Chain: Investment Strategy Discussion on Broadcom Stock and Options Trading (File 031818)
Email correspondence between Paul Barrett, Jeffrey E., and Richard Kahn regarding investment decisions on Broadcom (AVGO) stock, including options trading strategies and performance criticism.
Summary
Exchange of emails from July 13, 2018 discussing Broadcom stock investment strategy following a significant price drop due to an M&A transaction. Paul Barrett recommends purchasing protective put options while maintaining the equity position, with detailed analysis of August and September put pricing. Jeffrey E. expresses frustration with trading execution and performance, providing critical feedback on options selection, timing, and overall investment management strategy, citing amateur-level trading decisions and significant portfolio losses.
From: Paul BarrettSent: 7/13/2018 6:57:15 PMTo: jeffrey E. [jeeyacation@gmail.com]CC: Richard KahnSubject: RE: AVG°Attachments: image003.jpg; image004.jpgImportance: HighWe own 8000 shares on the thesis that their growing exposure to data center capex spend would be a big positive forthe stock.Recommendation: Keep the stock and buy Aug $200 puts on the 8000 shares costing $6.50 or $52,000. Nothing haschanged regarding their core business. Data center spending is not going to change based off this M&A transaction.However if I am wrong and the market further penalizes the stock at least our losses are contained. The stock hasdropped $40 and I think we could easily recoup our premium if the market buys into the CEO's reason for the merger.If I never had a position I would absolutely buy the stock using options. I would be selling October $185 puts and buyingOct $220 calls costing 50c/share.PaulPaul BarrettAlpha Group Capital LLC142 W 57th Street, 11th Floor, New York, NY 10019ALPHA GROUPCAPITALFrom: jeffrey E. <jeevacation@gmail.com>Sent: Friday, July 13, 2018 2:18 PMTo: Paul BarrettCc: Richard KahnSubject: Re: AVGOAgain?? How many puts ? What are the alternatives. The fact tgat you iwn thd stock at a higher price is affecting yourdecision. Sorry. This is judt ridiculous!!! Would you buy the stock here .7777 If you would would you also buy puts??? My patience is at its endOn Fri, Jul 13, 2018 at 2:13 PM Paul Barrett wrote:My initial recommendation this morning was to buy the $200 Aug puts. I still think that is the best idea. The stock isnow down 16% on a deal that no one fully understands. The CEO has a good track record regarding mergers. So I thinkit makes sense to keep the stock and own protection for the next 35 days until we hopefully get more clarity frommanagement.Paul BarrettHOUSE OVERSIGHT 031818Alpha Group Capital LLC142 W 57th Street, 11th Floor, New York, NY 10019alALPHA GROUPCAPITALIIFrom: jeffrey E. <jeevacation@gmail.com>Sent: Friday, July 13, 2018 1:55 PMTo: Paul BarrettCc: Richard Kahn <:_____________________________________Subject: Re: AVGOlye had enough!!!! Which puts ???On Fri, Jul 13, 2018 at 1:40 PM Paul Barrett wrote:Any thoughts on the AVGO Aug puts? Stock trading at 204.50.Aug puts now $6.50Paul BarrettAlpha Group Capital LLC142 W 57th Street, 11th Floor, New York, NY 10019alALPHA GROUPCAPITALFrom: Paul Barrett' Sent: Friday, July 13, 2018 9:42 AMTo: jeffrey E. <jeevacation@gmail.com>; Richard Kahn <I Subject: RE:JeffreyI understand your frustrations and appreciate your willingness to figure out a solution. I have some ideas which I willsend you over the weekend if that is OK.Re Broadcom: the stock is up $1.20 at $211.50. After the initial shock reaction of yesterday, there has been a lot offocus on the cost synergies etc. but very little conviction in revenue opportunities. However until we hear frommanagement as to the overall intentions of the deal, uncertainty will linger.HOUSE OVERSIGHT 031819This morning the pricing is as follows:Aug 200 Puts cost $4.10Sept 200 Puts cost $7.90Earning are on 08/30. So worst case is the uncertainty lingers until then which would argue to buy the Sept puts.However I still prefer buying the Aug puts as I would fully expect more clarity from management before August expiry.PaulPaul BarrettAlpha Group Capital LLC142 W 57th Street, 11th Floor, New York, NY 10019aALPHA GROUPCAPITALFrom: jeffrey E. <jeevacation@gmail.com>Sent: Friday, July 13, 2018 7:11 AMTo: Paul BarrettSubject:Richard KahnIm not angry, sorry, it is sad. it is apparent that you have no experience trading. we both made a mistake. . thespy trades were the results of a rank amatuer.. you took a postion on the direction of the market. ok. youdecided to play it extra short time and short. . why? becaue the options are cheaper. ? knowing full well thattime premium was running. . first silly move. . I allowed as promised to give you authority. . you set a target. . ithit the traget, you moved in back. based on media reporting on trump visit? you didnt act. the market dipped andyou panicked. . AMATEUR. wrong options wrong timing, no discipline and as a percentaage of investment, a oneday dip fof 25%. wanting to buy the highter strike, is ok. but why the same month? why the same moment. whythe same index. . sorry. I have taught this for many years. and your grade is an F. not one good move inmany. . re broadcom. the crack happend in the morning, options were higher. no alternative presented. noanalysis. , this is no way to manage money. I have lost a great deal of money hoping you would be able to do asyou promised you could . would.. Had you told me, jeffrey I d like to try a new job as a manager lets start slow Ican learn . i would be less annoyed. you told me you had great confidence knew the risks and truly believed youwould be able to raise money .do well and prosper. . If it were not you, this would have ended months ago.. weshould work on a solution . not sure yet what shape it takes.please noteHOUSE OVERSIGHT 031820The information contained in this communication isconfidential, may be attorney-client privileged, mayconstitute inside information, and is intended only forthe use of the addressee. It is the property ofJEEUnauthorized use, disclosure or copying of thiscommunication or any part thereof is strictly prohibitedand may be unlawful. If you have received thiscommunication in error, please notify us immediately byreturn e-mail or by e-mail to jeevacation@gmail.com, anddestroy this communication and all copies thereof,including all attachments. copyright -all rights reservedplease noteThe information contained in this communication isconfidential, may be attorney-client privileged, mayconstitute inside information, and is intended only forthe use of the addressee. It is the property ofJEEUnauthorized use, disclosure or copying of thiscommunication or any part thereof is strictly prohibitedand may be unlawful. If you have received thiscommunication in error, please notify us immediately byreturn e-mail or by e-mail to jeevacation@gmail.com, anddestroy this communication and all copies thereof,including all attachments. copyright -all rights reservedplease noteThe information contained in this communication isconfidential, may be attorney-client privileged, mayconstitute inside information, and is intended only forthe use of the addressee. It is the property ofJEEUnauthorized use, disclosure or copying of thiscommunication or any part thereof is strictly prohibitedand may be unlawful. If you have received thiscommunication in error, please notify us immediately byreturn e-mail or by e-mail to jeevacation@gmail.com, anddestroy this communication and all copies thereof,including all attachments. copyright -all rights reservedHOUSE OVERSIGHT 031821