Wow, they are just killing anything Oil related. We really need Oil to at least stabilize and prove it's just not in constant freefall.
Taking a risk and loading the boat today in NE...both stock and options. Selling the July 30 puts for $1.00 and above.
It's frustrating, so I'll reprise my argument that NE's stock price is way over-influenced by oil prices.
1) Their existing rigs are under long-term contracts that are independent of oil prices. The cash those contracts produce + the liquidation value of their fleet seems to me > NE's current price ... even assuming NE never gets another contract.
2) Of course, NE will get more contracts [maybe even today?], and that is because at today's oil prices, or even lower, it makes sense to drill. That's because (I think) drilling is governed not by today's oil prices, but oil company's view of future supply/demand imbalances.
2A) But even if oil and oil futures went to a price where it did not make sense to drill ... I believe oil companies would drill anyway (see: Chesapeake and any other US shale company). And that's because the oil companies view these as long-term assets, the control of which is necessary if they want to grow their oil production over the long term. Companies are not going to stop drilling because today's price drops below a threshold - (note - for almost the entire history of offshore drilling, they've been drilling at lower oil prices).
With the lack of clarity until mid late June (greek elections and fed meeting), it seems better to stay clear of equities, especially the commodities. In my opinion, in mid june, there will be a capitulation week on high volume, which will be the time to buy. Otherwise, one could try trading these 4-5% moves.
No. This is about the US duping Saudi Arabia into overproducing to conteract the Iran sanctions. Iran still produces though and sells to China at lower prices. The net effect is more oil on the market and Iran getting a lower price. This could end badly for OPEC since Saudi Arabia may not be able to stop an extended slide once it gets going.
Getting close to $100 brent. If it holds oil service should bounce. I bought a bit of NE today since it didn't go up much yesterday. Things seem to be coming to a head in June. Policy makers need to act fast or a recession will be unavoidable.
Turbo, swing trade on the shares, thinking a bounce is due, looking for a few points gain over the next few weeks.
On the put trade will either be able to pocket the premium, or get put stock for a 29 breakeven which is a price I'm willing to buy and hold for awhile if we get further meltdown.
I have a large position at this point, and am planning on reducing it in the 34-35 range if it can get there over the next month or two.