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Cliffs Natural Resources Inc. Message Board

eechicken 7 posts  |  Last Activity: 7 hours ago Member since: Dec 10, 1999
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  • Reply to

    weak pound sterling effect on BP profits?

    by dab_runner Jun 24, 2016 9:02 AM
    eechicken eechicken 7 hours ago Flag

    I am neither short nor long. I used to be long BP. May be I will be long BP again in the future. What I state makes perfect sense. Maybe you do not have the mental capacity to understand how dramatic UK currency depreciation would negatively impacts UK shares traded overseas as ADR. Unless you live in UK and own BP ordinary shares, there is a currency effect from UK to US currency conversion. Normally, the currency moves are minimal and have minimal effect. However, if the currency moves are dramatic, then it would also affect the US ADR shares. I am pointing out the downside risks and it is better to be informed then not.

  • Reply to

    weak pound sterling effect on BP profits?

    by dab_runner Jun 24, 2016 9:02 AM
    eechicken eechicken 15 hours ago Flag

    Part of the oil price increase came from disruptions in other producing countries. Brexit and those countries getting production up again may bring prices down some. BP ADR shares in the US will likely head lower in the near term from brexit. Severe currency moves in the UK currency will affect BP US ADR share prices. Some say the UK pound may get down to 1.20 level. If it does get there, BP US ADR should trade around 27-28 dollar level assuming BP ordinary shares trade near 4 uk pounds per share. Once the market overreacts and sell BP too low, then that would be a good time to buy. It may get there, but it is not there yet (IMHO). There is not enough fear/risk priced into the shares currently.

  • Reply to

    weak pound sterling effect on BP profits?

    by dab_runner Jun 24, 2016 9:02 AM
    eechicken eechicken Jun 25, 2016 1:55 AM Flag

    Agree that oil is traded in dollars worldwide. BP is an international company. The costs for each operated country would be in the local currency and not only in UK currency. Because UK currency is weaker, the cost of gas will be more expensive in UK. Maybe that slightly decreases demand in UK and lowers revenue. So I disagree with your "increase in profits" suggestion. Also BP ordinary shares are valued in UK currency. BP US ADR shares are valued in US currency. There is a UK to US currency conversion factor in play and this can not be discounted. How does currency affect ADR?

    For Example assume BP ordinary shares are £4. (it's actually a little lower). BP US ADR=6 shares or £24. If 1£ = 1.30 USD, then BP US ADR would be 24*1.3 or $31.20 USD. If 1£ = 1.50 USD, then BP US ADR would be 24*1.5=$36 USD.

  • Reply to

    weak pound sterling effect on BP profits?

    by dab_runner Jun 24, 2016 9:02 AM
    eechicken eechicken Jun 24, 2016 12:52 PM Flag

    Not sure about BP profits. It does affect the ADR stock price.

    BP is domiciled in UK. It's stock trades using British currency.
    In the US, BP is traded as an ADR (6 ordinary UK shares) in US currency. There is a conversion rate from UK currency to US currency. So even if the profits are not affected, the ADR stock price in US would be impacted by the currency move. I am short term bearish on BP because the ADR stock in US does not yet fully reflect the UK currency weakness relative to the US dollar. There is a chance the UK currency can still get weaker from here affecting the ADR stock in the US. Longer term, this ADR stock price weakness due to UK currency weakness will likely be a buying opportunity.

    Thanks

  • Reply to

    Time to buy

    by jrcumins Jun 24, 2016 7:16 AM
    eechicken eechicken Jun 24, 2016 9:34 AM Flag

    Sometimes it's better to be lucky. Dumped all my BP shares yesterday because I felt that BREMAIN was already priced in even though BREXIT was still a 50-50 proposition. Will be looking to buy back in the near future. I think BP could head lower than 32. BP traded from low of 30.66 on 6/14/16 to high of 34.75 on 6/23 on BREMAIN hopes and increase in oil prices. Now that BREXIT has taken place and the oil prices fell back a bit as well, I expect these gains to be wiped out in the short term creating a buying opportunity.

    I would not buy BP right away today when the market opens. I would let the market take BP down first before buying.

    Thanks

  • Reply to

    Strange Options Pricing relative to Stock Pricing

    by eechicken Apr 11, 2016 11:30 AM
    eechicken eechicken Apr 11, 2016 5:17 PM Flag

    Nevermind. Options just seems a bit slower than the actual stock to respond.

  • I was looking to sell Jan $10 calls against my AG long position.

    It's strange that AG stock is trading 50 cents higher but this option is trading 10 cents lower.

CLF
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