What a coincidence. DNR had a Yahoo kind of day!
Bob
--- In ConservativeOptionS
>
> First, I think this post can start a dedicated thread to the discussion we have been having - an absolutely great discussion.
>
> I indicated my two favorite issues for CCs or CSPs are DNR (Denbury Resources) and GE. The question was asked why. So - aside from my personal emotions - here is my logic (note - I used April prices as we are fairly deep into the Mar cycle).
>
> 1. Both issues trade around $15. For some reason that price level seems to offer nice premiums for a relatively small investment.
>
> 2. DNR is an energy stock that has an extreme bias towards oil. If you believe in oil - this is a great stock. It is not impacted by the natural gas glut.
> * DNR is currently involved in closing an acquisition (hopefully end of March) that has in my opinion temporarily impacted the price. That means I believe it will be going up the remainder of the year so I feel very comfortable with new purchases below $15.
> * DNR is followed by two energy groups/services I follow so it is not just me following the company.
> * Because I have played it for more than a year I feel comfortable with the price action.
> * DNR is currently selling near $14.35 and the April 15s are selling around $.55. This is norht of 3% with I believe a great opportunity to be called.
> * If DNR is above $15 near expiration - but not far above - I will simply roll the near month calls for the next month calls.
>
> 3. GE is a diversified stock that trades around $16 and pays a quarterly $.10 dividend.
> * GE is a 4 Star rated S&P stock.
> * GE trades $ strikes.
> * The financial component of GE is a concern - but via MSNBC GE has sold its soul to the administration and will not be allowed to fail.
> * GE is trading around $16.10 and the April 16s are trading around $.67.
> * Like with DNR - if the price at expiration is over - but not far over - I again will simply roll the near month calls for the next month calls (I got ~$.35 for Feg to Mar.)
>
> For GE I can get north of 2% plus a dividend and for DNR I can get north of 3%.
>
> Bob
> * Like DNR - i
>
No comments:
Post a Comment