Posted on 04/26/2016 2:32:38 PM PDT by bananaman22
Are you tempted by nice dividends such as BP’s 7.53 percent and Shell’s 7.31 percent? Long-term investors are. They’re lapping up the oil majors on dips to cash in on their impressive dividend yields in hopes that the massive rally in crude oil from the lows of $27.10 per barrel is an indication that crude has bottomed out and higher prices are around the corner.
The large investors are pursuing the oil majors for their stability and safety, which has boosted their prices, but even after the rise, prices remain below their 2015 highs.
The oil majors are expected to report poor numbers this earning season. Jefferies’ equity analyst Jason Gammel believes that the “1Q16 reporting period looks set to be even worse than what we thought was already an especially ugly 4Q15."
(Excerpt) Read more at oilprice.com ...
You can buy the common stock and protect it with long puts, say two weeks before the dividend ex-date, then collect the dividend, while the combination of the put and the common have exceptionally low risk. One of my favorite strategies. I can (and anyone can) get the absolute risk under the dividend amount.
Meanwhile, my friend whom I am trying to teach this who poo-poos me about it has probably lost $60K on his beloved MSFT & AAPL this week. We’ve seen peak AAPL. It just got dirted.
There is no way to own common stock safely without a collar. (stock + put - call)
If it pisses off enviroweenies to invest in oil, I am all for it.
so if I bought some Shell, then what? I’ve never “collared” a stock with puts before...
AAPL down over 8% in extended hours...
I’ve never done options, so a “long put” (from what I read) is the opportunity to sell at a previous price if the stock falls? Like shorting a stock?
I usually just buy from companies with good fundamentals on dips, building a position if it dips again. They almost always come back to a point where I make money.
A buck is a buck. Show me the money.....
Rather than try to explain possibly and probably imperfectly, I’ll refer you to radioactivetrading.com These guys are the married putmeisters; safeoptionstrategies.com are the collarmeisters. There are archived webinars on both sites that explain married puts & collars. I do “it” (eg; achieve the married put position that is the foundation for the collar) differently than they (either of them) do, but the principle is the same. I do not always go for the collar but I pretty much will not own naked long stock without put protection and no bloody way will I do so over earns.
Warning: You will need more than a 30-second attention span to grasp these strategies.
Thanks trying to understand, seems to make sense.
“Rather than try to explain possibly and probably imperfectly, I’ll refer you to radioactivetrading.com”
Great, thanks!
Watch those webinars, they are not hours and hours long and they are not complicated....but I don’t know if you (or anyone else) actually knows what a “put” is, I don’t know where to start the lesson. They explain it quite well. Eg; the work has been done.
With their strategies, it is easy to keep any possible loss (yes, any, even under extremely brutal conditions, eg; stock goes to zero) to 6% and it is important to understand the mathematics and math implications of keeping losses in single digits. Which are profound. With my strategies, I can keep losses to under 1%, but I have to work harder to make gains and sometimes that work creates risks that do not work out as I would want; but those subsequent trades are indeed subsequent trades and every new trade bears *some* risk. if it did not, there would be no potential for gain.
Thanks for the info
Much appreciated.
For a long time, oil stocks were great, especially the dividends. But starting in Aug 2014, they dropped very quickly as the price of oil declined.
I have some stocks that are worth just 5% of what they were back in July 2014. While some of those still pay dividends, many of them have stopped. I don’t need the $$ and I think oil will eventually rebound, so I didn’t take the loss. However, the big danger is that some (many) companies will go bankrupt the longer oil stays under $40/barrel.
I would rather invest in the tech stocks for 2017.
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