What are the thoughts on AMBA’s CEO selling so many shares? In 2013 he owned 1.2 million shares totaling 4.4% of the company to only 141,158 now for less than 0.5% of the company in just two years?
Chad
I have a question about AMBA. Saul is this one of your former holdings? I thought I saw it once in a portfolio listing but not the most recent one you just posted for earnings.
Thanks,
Karen
AMBA has grown to be a large percentage of one of my four portfolios. I sold some covered calls a while ago at a strike I thought would be a stretch, and it turns out I’ll “lose” some money by the time the shares are called away from me in May.
No, I’m not going to roll them up and out - well maybe . . . 
Maybe I don’t know how to manage options very well. I’ve rarely lost money outright, it’s hard to lose outright when you only sell options and occasionally buy them back for less just to close the position. But more than once I’ve felt I would have been better off by just buying or selling rather than putsing around with options.
Saul says he doesn’t do options. Obviously, it’s not because he doesn’t understand them. He’s never come out and said it directly, but one can assume that he feels the return they provide is either not worth the effort, or illusory or both.
Doh! I forgot to respond to your question. In general, I don’t pay much attention to insider transactions. I concede, once in a while they warrant attention, but most the time, IMO you have to be pretty presumptuous to infer someone’s motives based on their stock transactions.
So the guy sold a bunch of his holdings in the company for which he’s the CEO. What other transactions did you do? Oh yeah, he’s not required to tell you, so he didn’t. What did he do with the money? He doesn’t have to report that either. What were his thoughts about the future of AMBA at the time? No report on this either.
So, what are your thoughts? Do you think it’s important to your investment thesis? What are you going to do differently because this guy sold some stock? As for me, it changes nothing.
Saul says he doesn’t do options. Obviously, it’s not because he doesn’t understand them. He’s never come out and said it directly, but one can assume that he feels the return they provide is either not worth the effort, or illusory or both.
I think the main reason is because his funds are in tax deferred accounts which don’t allow margin and hence I don’t think allow most options trades. Also, Saul keeps almost all his funds invested so he has little/no reserves if shares were to get assigned.
I have a question about AMBA. Saul is this one of your former holdings?
Karen, I have a small to medium size position.
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Also, Saul keeps almost all his funds invested so he has little/no reserves if shares were to get assigned.
If you sell covered calls or buy puts as insurance and are assigned, you get cash for your shares.
Denny Schlesinger
Maybe I don’t know how to manage options very well. I’ve rarely lost money outright, it’s hard to lose outright when you only sell options and occasionally buy them back for less just to close the position. But more than once I’ve felt I would have been better off by just buying or selling rather than putsing around with options.
Selling covered calls is a bit like buying insurance, it has a cost in missed opportunities when a stock unexpectedly shoots up but you don’t have a real loss. On the other hand, selling puts is riskier because you might wind up paying a lot for worthless stock. I’ve given up on selling puts.
One should look at all the calls sold over a time period, say a year. That would give you an indication about how successful your trading is – how much cash you got and what opportunities you lost.
I always calculate the CAGR of being called. If I can’t get at least 25% I won’t sell the call, the exception being when I’m happy to sell the shares but then it’s often better to just sell the shares. If I want to keep the shares I aim for 40% CAGR or more.
TINSTAAFL
Denny Schlesinger
I’ve got stock in a taxable trust account, a tax deferred traditional IRA and a tax deferred Roth IRA. I am in no way inhibited from trading covered calls in any of these accounts. One of the IRAs (I forget which) doesn’t allow put transactions, even cash covered puts (which are the only kind I sell). The broker told me I could change this if I change the account type. So far, I’ve not done so, because it’s not that important to me. I use options very sparingly. I only sell covered options to open. I only buy to close. Sometimes I use spreads to roll a position up and out. That pretty much covers it.