Has anyone ever accused you of not having much imagination? ;) I'll take the other side and guess the market continues down tomorrow, near or into triple digits on the Dow. The cash out may continue with China concerns, and Putin being Putin (someone please invent a time machine and get him back to the early 1940's where he belongs). If we make it through the weekend without any worsening world tension, then it'll be ok to "buy the dip" and venture back in I suspect. Anyways, I sure as heck hope I'm wrong, would love to see a bounce back tomorrow instead.
Keebon, if you regretted not making the NATDF to NADL transfer.. Right now is "your chance". You can sell NATDF for 8.40+ and buy into the more-liquid, NYSE-traded NADL for an even lower price ($8.31).
Of course I am not a fortune teller, can't say if this "opportunity' will stick around for a while or even if the spread won't worsen further. But for here & now, you can get over to NADL if you want and your transaction costs should likely be more than covered due to the spread favoring NATDF.
SDRL is down with all the deep sea drillers. Look at RIG, ESV, NE, and DO to name a few. All down between 3% - 5% today, on heavy volume.
There's some news re: a company in Guinea halting drilling, it impacts a SDLP rig (recently dropped down from SDRL to SDLP). But this appears to be due to corruption-related stuff as opposed to a more systemic issue. The gov there is poor and wants offshore drilling.
There are many articles by CHS, any chance you remember the title?
Agreed, the uptrend may continue. No reason it couldn't stay with us the full year for that matter. I'm betting this year overall goes up or sideways, or I would not be as invested as I am. But there's a lot of confidence now that we can weather anything, so the potential for a downside surprise may be increasing.
We'll only know the answer in retrospect. In times like these, I try to fall back on a little discipline. So, today I began selling out-of-the-money April calls on a key position. If the uptrend continues and the stock price goes past the strike, I will be having one hell of a year and will not be able to complain much about selling at that level. And if a larger pullback hits instead, I will at least have locked in some gains. Though that always tends to be a fraction of how much one's remaining positions pull back, huh?
Yes, everyone always feels they will see the market pulling back and will know to get out not long into it w/ only small losses. Of course, it tends to end up a couple ways. Either we sell prematurely on a minor dip and totally miss the fast rebound, and then get stuck waiting in cash while the market continues to leave us behind (later leading to buying high, often right before the "real" drop)... Or as you described, we instead buy the dip or hold through the first leg of selling, and then as we wait for our holdings to bounce back, instead the market will drop hard and put us into a deep loss that we figure we "have to hold through for a little while". And then the loss will end up getting deeper and deeper from there.
I include myself in the descriptions above, I will get caught in some manner, I just don't know how :). So, at the least I should get some covered calls going now. I am fortunate to be well ahead this year, so the risk of losing upside is much easier to deal with than not locking in gains & losing them all.
Have been feeling the exact same way lately and expressed this same opinion to others in the past few days (Is this climbing the wall of worry, or is this finally a topping action before we finally start getting a notable pullback in the market?). I've been going back and forth between the two. Though I think if a real pullback happens, it won't be sparked by the factors you mentioned, as they are the "bus we can see" and therefore unlikely to be the one that hits us.
The only conclusion I've come to so far is that if I get a little strength in my top holdings in the coming days, I'm reducing exposure. Just wondering if I will actually get the opportunity. All my holdings have pulled back in the near term from their recent highs, and I may not get the chance to sell if I wait for them to return to near those levels. Maybe I'll sell some short-term covered calls which has a lower bar for me than outright selling shares, but I'm still looking for a strong day to sell the calls, which again I may not get until it's been 3 steps back, 1 step forward...
I have my doubts that a pullback would be very severe though, in part exactly because we've had this sentiment of worry for a little while now & I think there's a decent amount of market participants who have already acted on it and generated some cash.
I think you made a great move doing a delayed swap between the two (and perhaps picking up additional LNCO shares given the LINE premium?). I remember early on yesterday LNCO was holding -$1.5 for a while, and then surprised when it went to -$2's. Sounds like you got in a little ahead of the lows, and I got in a little after. I think the stock was trading down around -$1.7's as I was placing options bets. When management actually gave a full (and positive) response on the CC to what they thought of the stock price response to the ER, you could see the stock really start marching back, and as I saw that I wasted little time aggressively filling orders.
Sideways for a while is fine with me, would love to see it get back to $32 but with all the time & dividend premium I sold for, I'd be in good shape if it just held today's highs in the long term.
Nice summary! And, looking good for us re: stepping in on LNCO weakness yesterday morning. Not only came back up a bit that day, but continuing with a notable climb today.
I placed (additional) bets on LNCO today as well. In my case, selling various naked puts for March, April and May expirations ($29 - $30 strikes).
Once they started talking about their surprise to the stock's reaction today, did you notice the stock start turning around? Also interesting to hear an analyst ask about the LNCO/LINE spread. Glad to see the analysts posing more "down to earth" questions like these which are on the mind of the retail investor.
I'm beginning to wonder if SDRL can even announce a new deal any more without some sort of "financing strings" attached. I have been a SDRL bull (and stockholder) for many years but the way they are doing things now has started to wear on me. Recently I sold my position entirely at ~$37 as I felt the stock had more downside.
I long for the days that they would do a deal for one of their stocks and "just" pocket all the operating profit within that stock - no partnerships, profit-diluting financing via sister-companies (NATDF-SFL, from the p.o.v. of a NATDF stockholder), or frequent drop-downs including sending new top-producing rigs to SDLP, an entity that I thought originally was supposed to be for "older" rigs only... SDRL price back at the $35-$36's of 2011, except back then the div was ~75c.
How they've handled NATDF/NADL has worn on me a lot too. Still own lots of shares there.
Well, JF vets know the deal... Bear through the periods of weakness because the div will pay you well while you wait and the stock will (typically) come back. While I imagine I may continue to own either SDRL, NADL, or a combo of the two, the bloom is off the rose for me, a lot of years of faith has transitioned now to "show me first". Let's hope the fast-approaching Feb 25 ER/CC starts to turn things around for them. I am fine with missing out on a potential pop on good news. Usually best not to gamble and try to time a bottom, better to see it after the fact and be able to invest with more confidence & less risk.
I sold my entire SDRL position yesterday. I think I'd be preaching to the choir to say the company itself seems to be in a solid position: modern rigs, well managed, tons of backlog & almost everything contracted out for this year, incoming newbuilds, and the stock has a div yield over 10% so owners are well-paid to wait.
But as we also know, there can be a big disconnect between a company's fundamentals, and how the stock price will act, particularly in the short term. SDRL may be in better shape than its competitors, but the sector is heavily out of favor and unlikely to suddenly snap back in coming weeks. The shorties and the self-serving analysts love blood and may continue to pile onto a wounded animal.
SDRL will have an opportunity to distinguish itself when earnings come around, but that's nearly 5 weeks away and is no guarantee. So, limited upside in the meantime, but still some downside. As I've watched my shares drop from 47 to 37, I'd rather be safe than (more) sorry. Time to catch a breather until the sector and/or SDRL have shown an indication that the bottom is in. Better to pay a little higher price by waiting until after the lows before considering buying back. But I wouldn't blame those who stay in, traditionally I've done the same, looked the other way on stock price, enjoyed collecting my divvies, and over time the price came back and then some. Call me less patient this time around, and taking risks in other areas such that I don't need added risks w/ SDRL.
Good luck all!
Tried posting it several times now, Yahoo wouldn't let me through. Anyways, for those who go to that site... Select "Continue" and then choose North Atlantic Drilling from the list and you can watch a nice 20 min video of the NATDF/NADL IPO road show presentation.
Ahh, now the comments make sense.. So you own protective puts for some Long shares, and are looking to spread the Puts. IMO, without any other info (expirations for the long & short puts), $12.50 seems like a good strike for that. Maybe with current market weakness you'll get a chance to create the spread on a quick drop in ALDW. Good luck!
Something isn't making sense to me. You say you would be covered for selling Puts, but then you said you have a Long position. To be covered when selling Puts, you would need to be *Short* shares. Or alternatively, to have cash set aside solely to purchase all the shares should they in fact be "Put" to you, aka "selling cash-secured naked puts".
To sell *covered* options on a Long position, you would either be selling Calls (not Puts), or, though I'm not getting this from the context of your posts, I suppose you could create a Put spread if you already own (are "long") Put contracts of a different strike or expiration.
Heyya Huff! Well, back for today anyways ;). Yeah, was just commenting to someone earlier that the timing couldn't be much worse, with deep sea drilling being completely out of favor and constant downgrades coming day-after-day for various companies in the sector. If I had to guess, the IPO may not give us much of a pop. But maybe with the new rig getting started soon, we'll see a div increase/improved guidance in the upcoming ER, and then perhaps the stock can go higher.
Note that the NADL ticker is finally "alive", and is displaying the latest PR announcement.
Wow is SDRL tanking today, on heavy volume. Sad to see it back at 37's.
Announced a few minutes ago.. The NATDF (NYSE ticker: NADL) is happening. Shares will be priced at $9.25. You can find the announcement under SDRL's ticker.
Side Note: Just wanted to pop in quick and share the NATDF news as I know a few of you are in this one, like I am. Haven't really been checking the SFL forum for about a month now, things got really busy & I've also been content with my holdings. Will try to stop in more in the future ;) but could take a bit. Best wishes to everyone including now that we're finally hitting a little turbulence.
Huff, all: I've been really low on time lately, and that probably won't change for this week... Looking forward to picking up the options talk after that, maybe it might change a couple minds here. I think there are a lot of misconceptions, and the truth is that options can be amazingly simple, very safe, and helpful in reaching your investing goals.
Options are nothing more than an additional set of tools in your arsenal, it is up to you as far as which you use and how you use them. Yes, some of these tools are "power-tools", which is both a good and a bad thing. Wield them poorly and you can lose an arm, but there is no reason you ever have to use any of the "power tool" strategies. Some strategies actually favor the long-term, conservative/low-risk investor.
Huff: Saw your Part1/Part2 post, hope to reply in a few days.
Good luck to all of us this week, hopefully the Fed update on Weds turns out to be positive or neutral for the market, and not a smack-down.
Huff, looks like he's annualizing the rate of return... So since it's only a 1 day trade, he's multiplying by 365! Personally I don't find annualizing a useful metric for short-term trades...