STOP already, oil fell (at one point) over THREE freaking dollars today. Oil stocks are going to suck.
You can't tell me EXXI isn't BORING the heck out of anyone watching it!! Patience turns the goat into the gazelle.
I've seen this a hundred times....when a stock takes a poop during a month as EXXI did, even if it is a big DJ stock, there will be selling pressure until the EOM so the fundies can get rid of what they perceive to be a loser. They do not want the stock to show on their books. Thus, it's tough for the stock to overcome the selling /unloading pressure because the funds sell into any sort of rise because they want it off their books. If there was "natural" selling pressure, meaning a pure dominance of selling over buying, the stock price would keep falling. You would not see a "floor" in the price. That is not what is happening.
As I said in a prior post, I suspect EXXI will trade around 16.25, the halfway back point between the reaction low of about 16 even and right about here. about 16.50, in a fairly unimpressive range that will get everybody completely bored. I definitely do not rule out a return to 16.2 or even 16 even. After the end of the month, the "unload" pressure will be removed and the stock will be free to act like a normal stock with the overhead removed. I'm not saying the stock will gap up 3 points Sept 01.
So for the next week, prepare to be bored with EXXI. I think gets back to well over 20 but it will take some time and of course the price of oil probably needs to get stronger which means the dollar has to weaken a little. Both of those things should happen, given some time and not really much time. In the meantime, traders can sniggle back and forth to try to lower their costs by 35-50 cents (with a risk that you'll be out should it take off) or you can sit on your butt, forget about EXXI for a week or more, and let a fairly predictable phenomenon play out.
I like the way the stock is trading, that is for one who has a longer term perspective. ~~$16 was the reaction low, ~~15.50 was the "shakeout" low, and ~~16.50 was the reaction high after the big dump. It is IMO constructive for the stock to hang out at "HWB" = halfway back = the midpoint between 16 and 16.50 and it may well do this for a while. Let's not forget that this has happened against a $5 drop in crude oil, from about 98 to 93, so it is or should be understandable that oil stocks should get kicked out. If that is the case, then you are seeing where EXXI trades with TWO strikes against it (oil dump and earns disappoint) and so this, to me, is evidence of a bottom. Most likely EXXI will rattle around this halfway back point of 16.25 +/- until the end of the month as funds get rid of what to them is a loser. After that, the stock will be free to rise. I don't rule out a return to 16 even but I suspect buyers will come in around there and begin to rebuild interest in the stock. At any rate, I believe the worst is over for this little episode and things are bound ti improve...especially after Sept 01. That's my .02.
I totally (well....half) screwed up on ESV. It's a stock I like a lot. I bought it at ~~54 which I knew was the highest price it had hit for quite a while. Knowing that, I bot 60-struck puts for 6.2 at the same time, creating a hedged position with maybe only 20 cents at risk. I also sold 55 calls which went out worthless for a tiny little 40 cents. I KNEW and EXPECTED ESV would fall from 54 and it was my intention to sell off the puts at "the bottom" leaving me straight long the common. Unfortunately I did that about 2.5 pts early, sold the puts for 8.2, then watched the stock fall further. I had no need to sell the puts, they still had a couple of weeks on them. Anyway, I "created" the stock at about 51.7 considering the call and put gain. So, not fatal or anything, just clumsy.
Selling puts so far out in time is IMO rather a different strategy, at least as I see it. A heck of a lot can happen in 1.5 years. Much less is likely to happen in 30 days, though the put seller must be prepared to be assigned. And I tend to doubt the Sept put seller is looking to buy back his position, though of course he/she *might* if the thing gets down to a nickel or so, just out of risk control.
SC, you really cannot make that case, with all due respect. If you love the div, you obviously have to hold the stock which means holding the risk of the stock. The only way you care if it drops 50 cents is if you are looking to sell it, and if you are looking to sell it, it's no skin off my back or anyone else's. But then you would be not caring about the div. What I am saying is that you are holding two different opinions: One of a seller and one of a holder.
ESV even though it had a nice day is not well positioned pricewise to write calls. And they sure don't fetch much. If you write 50's, you will probably lose the stock (get called out) on the ex-div. If you write 52.5's you get nada. There are over 14K calls struck at 52.5, which to me means ESV has low chance of getting to that price. However I *do* expect it to rally maybe another point or so to the div. My current thinking is: I am going to wait a little, and probably buy really DITM puts, like 60-struck, on a GTC LO a tad above the market...perhaps at an ESV price of 52.25. Such puts would cost maybe 7.90 for Sept or maybe 8.3 for October. If filled, I will either sell them off next dip, or, sell some puts against them.
IMO oil is a fine place to be, I happen to like speculating on natural gas more because there are a few more etfs (that are double and triples) relative to the underlying and I can hedge back and forth more easily. Incidentally, I think that Nat Gas made its annual low yesterday. Look at seasonal charts, NG usually makes its yearly low around this time. Even if not, it will be higher going into the end of the year.
Anyway, I like the oils and the refiners. That does not mean I am always bullish or bearish on them.
Close to $16 this is a very low risk entry, below book value. A 38.2 recovery would take this to 23.low. You could place a 3% stop 50 cents down if you're concerned. This hit is on a triple-overstated earnings miss, that error has been corrected.
Yeah, behavior today wasn't bad, but MPC gave up almost everything in a trashy mkt environment. Still, I'll take it. ALL the refiners got crunched today.
THIS is why you do not dip-buy even a great stock like EMN when it gets whacked SO CLOSE TO THE END OF THE MONTH!!
If it can get smashed 7 pts in a day it can lose 1-2 points the next day or so right before the EOM!
Funds have to get rid of stocks that do this.
I agree. Just don't be in a hurry. If the long run is weeks or months, then you don't have to buy it today. It's VERY likely that funds will dump this into the end of the month. It's free to watch that, It's expensive to try to outsmart it.