A few of us were discussing this on the trading floor - so I thought I would post it.
Few Key Notes -
The change requires shareholder approval. Each shareholder at the close of business on July 1 will receive, on July 15, 19 additional shares for each share of the same class of stock they own.
Currently - it would take an investment of $300,000.00 to wheel Google -
After the Spilt assuming it is approved - at the current price, it would be $15,000.00 investment
This play comes down to capital management, and where you predict Google to be in July -
You could watch the dips, and acquire 5 shares of google between now and the end of June - this assumes you think the price of Google will be better after the spilt and the capital can not be used somewhere else to better effect.
In a smaller account a goal of 1 share a month starting in Feb - should reach the goal, though please keep in mind it is basically dead capital until mid-July.
You could also buy 100 shares after the spilt - for the current market price.
As for Class A or Class C - it is voting rights vs non - I think someone else might be better to explain that aspect if it is a concern.
I’m considering liquidating my boomer IRA acct to acquire 5 GOOGL pre-split. That would mean my retirement would be 100 shares of GOOGL post- split, to hold and sell CC’s for weekly passive income. NFA obviously, I’ll make my own call at the end of the day, but is that sound in your all’s boomer stock opinion?
I think it depends on the tax implications if any on the IRA, and also the mix of the IRA currently.
Also maybe consider reinvesting the premiums for the 1st year. Depending on how close to ITM calls you sell there is always risk of assignment.
Currently the positions in my IRA are a few select companies I scooped up in the market downturn at the start of the year. Not very large positions, just starters for the most part. I would take a loss on a few of them unfortunately, but a loss that I think a large position in Google would iron out quickly. Also for the CC’s I would choose strike that are far enough OTM that it would be less likely to hit, more just for steady passive then massive premiums. I would also choose strikes above my cost basis, so even if assignment happens, I would make profit. I feel I’m still young enough (35) that the loss from liquidating rn, would be minor in the grand scheme.
Shouldn’t be too bad, I would just warn at some point to in a major downturn you might be selling for like a calls for like $1 until the next upturn, which is fine since money is money and it all adds up - just one thing to be prepared for and hope never happens. Based on your age, I think it is reasonable to assume Google will be around for the next 30 yrs and also be a leader in the space.
Keep in the mind the overall goal of any long term wheel, is to you pay yourself back the initial costs and then create’s a “Free Money for Life” event. (easier said than done)
So I remembered reading this a while back and it has been on my mind for months. Today I finally decided to bite and pick up 5 shares. Let’s be honest, anything under $2300 a share is a steal for GOOG. The inflation and recession fears are what allowed me to pick up a full 5, so I’ll be holding onto these post-split and wheeling for the long-term. Will probably circle back here at some point to update. In the meantime here’s the peek: 5x Shares GOOG at $2290.00
Taking today into account, the new shares should be around $114 a piece, taking Amazon as an example -
as of this writing - (not recommending just an example)
EXAMPLES - also in a weird market range ATM
Shares @ 114.00 a piece
CC’s $10 OTM (weeklies) paying about 50.00 (used 7/15’s for estimate) 124’s
CC’s $5 OTM (weeklies) paying about $140.00 (used 7/15’s for estimate) 119’s
EXAMPLES
(this is a bit conservative)
Assuming the mean average of the two - $95
total investment 11,400 - weekly return $95 - 120 week breakeven - 30 months then the investment is fully repaid and all income after the fact is the free money for life scenario.
I think we’ll see a good conservative gains for the first few months post split. Looking at a few of the big historical splits within the past two years (ie AAPL, NVDA, AMZN) the companies consolidated for quite sometime.
I mean AAPL post split went down to $120 at one point, in March of 2021, nearly 6 months after their split took effect.
Another good one is TSLA. Kept hovering around the $420 price range for sometime.
