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The dreaded energy sector


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#1 LMF

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Posted 09 February 2020 - 10:27 AM

Bernie Schaefer put out a commentary on XLE energy sector. Its not going to catch a break until who knows when. The oil company stocks can go low enough, theyll finally just take the company private I would think. Theres the whole current generation of investors that will probably never buy an oil stock ever. In my own investing experience, theres an off limits zone at the 200 week MA that cannot be disputed. Theres bargains below that level for sure, but its never a reliable enough bet. Price will tell you when the coast is clear at the 200 MA weekly, and theres no missing out on upside. Even Boeing has performed better than XLE.......who could imagine that.

#2 kssmibotm

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Posted 09 February 2020 - 12:31 PM

Here is a strategy I am considering for XOM.  Buy shares to collect the impressive 5.7% div yield and sell ATM calls to protect against downward price movement.  All comments welcome.



People think the Holy Grail is something looked for but never found. In fact, it is something often found but rarely recognized.

#3 Douglas

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Posted 09 February 2020 - 01:23 PM

What is your strategy if the stock continues to fall?  Do you move your call strike price down and risk locking in a loss on the stock if you're called away or keep it near your purchase price and give up option premium?  When will you sell your calls, before or after the dividend dates? If ATM ones are sold before the dividend date and the stock rises and you're called away all you capture is the option premium.  The devil is in the details. I'm very interested in your thinking about those devils.  Thanks for sharing.

 

Regards,

Douglas



#4 slupert

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Posted 09 February 2020 - 02:18 PM

Bernie Schaefer put out a commentary on XLE energy sector. Its not going to catch a break until who knows when. The oil company stocks can go low enough, theyll finally just take the company private I would think. Theres the whole current generation of investors that will probably never buy an oil stock ever. In my own investing experience, theres an off limits zone at the 200 week MA that cannot be disputed. Theres bargains below that level for sure, but its never a reliable enough bet. Price will tell you when the coast is clear at the 200 MA weekly, and theres no missing out on upside. Even Boeing has performed better than XLE.......who could imagine that.

Still under the lower Bollinger band on the weekly, and it looks more like a bottom , could relive oversold and slump back down, but this is the kind of stock I usually stalk for as long entry with a HARD  stop, I'd see if it pulls back ST and see if that ST bottom holds (JMHO)   http://schrts.co/PDRIsRtg



#5 slupert

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Posted 09 February 2020 - 02:45 PM

oops responded to wrong person, sorry.



#6 kssmibotm

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Posted 09 February 2020 - 03:23 PM

What is your strategy if the stock continues to fall?  Do you move your call strike price down and risk locking in a loss on the stock if you're called away or keep it near your purchase price and give up option premium?  When will you sell your calls, before or after the dividend dates? If ATM ones are sold before the dividend date and the stock rises and you're called away all you capture is the option premium.  The devil is in the details. I'm very interested in your thinking about those devils.  Thanks for sharing.

 

Regards,

Douglas

 

I will roll the calls to slightly out of the money as the div date approaches to avoid having the stock called away.  Once div is collected, then roll to ITM options to collect more premium and gain further downside protection.  As expiry approaches, roll options to next month ATM or ITM depending on XOM trend.  I admit its a lot of work, but worth it if dividend is juicy 5+%.  Bottom line is... the demise of oil stocks is a long way off.  Fossil fuels are used in so many things besides gasoline.



People think the Holy Grail is something looked for but never found. In fact, it is something often found but rarely recognized.

#7 LMF

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Posted 09 February 2020 - 03:54 PM

Last time I looked, even the SPLV low volatility ETF was way outperforming what ever this sector can do on the upside......and theres even a small dividend every month. Look at the number of new 52 week highs on it......