SNHU 3 discussion

3 discussion Responses with references:1.
For this week I have decided to go with the company Costco Wholesale. This company was
founded in 1983 in Seattle Washington as a wholesale distribution center. Since then the
company has grown into one of the largest membership wholesale companies in the US. This
company seems to use call options for the company as a means of stock security. Buyers are
able to purchase stock options at a set price until a determined time, after which the set price
deal expires.
If I were to be a retiree from Costco, I would want to be more aware of the stock changes in
the past to make an informed decision on what to do with the stock received in my retirement
package. Costco’s stock prices have fluctuated a bit within the past five years but is steadily
growing. In 2022 for example, stock prices rose to $575.32 per share at its highest, dropped to
$450.19 in January of 2022 and has slowly increased to a current price of $700.74. I would
consider the option of holding the stock to see if it will rise more. However, knowing that
stocks can plummet it would be tempting to sell my shares to earn extra money. By retirement
I would have a 401K and depending on how much of a retirement package the company gives,
could already have a nice sum of money for my retirement by then. However, it would be
tempting to sell the stocks anyway to have that extra money to retire off of.
2.
Tesla, known for its innovative approach to technology and sustainability, offers stock option
compensation as a key component of its employee benefits package. The company’s stock
options are designed to align the interests of employees with those of shareholders, fostering a
sense of ownership and motivation among its workforce. Tesla’s stock options typically grant
employees the right to purchase company shares at a predetermined price, known as the
exercise or strike price. As the stock value increases over time, employees can capitalize on
the appreciation by exercising their options and then selling the shares at the current market
price. This approach not only incentivizes employees to contribute to the company’s growth
and success but also creates a direct link between individual performance and financial
rewards.
If I was a retiree who received shares of the company stock as part of my compensati on, I
would consider selling the shares when the company was in the middle of a strong period, and
reinvesting those funds in a safe, diversified investment portfolio. As a retiree, I would not
want to tolerate significant risk in my investments, and would choose a guaranteed source of
income, as opposed to investment in one single source with risk of loss.
3.
I have selected Delta Airlines, a major airline in the US and the world and one of the biggest
users of both Airbus and Boeing planes (delta.com, n.d). Delta had ups and downs during
COVID-19 and its aftermath (finance.yahoo.com, n.d.), so looking for options contracts is
interesting. As options contracts can be very lucrative, they can also expire and be out of the
money. Once the contract is out of the money and options expire, the investor will not exercise,
and lose money as options have no intrinsic value (Achievable. com, n.d).
With a call, we have the right to buy at a certain price, and with puts provide the right to sell.
Puts can also be used as “ insurance” when stock is owned as a hedge against possible decline
(Achievable.com, n.d.).
As far as retirement, I would keep some of the Delta stock but would make sure to heavily
diversify. Airline shares can be subject to great volatility (finance.yahoo.com, n.d.) and I would
look for ways to protect myself. Would not select too many options contracts.