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Mon Apr 18, 2016, 08:45 PM

 

Is now a good time to buy oil stock?

With the price of oil low and several companies paying 4-7% dividends. Isn't now the best time to buy oil stock and hld on to it long term?

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Response to craigmatic (Original post)

Mon Apr 18, 2016, 08:51 PM

1. According to the old rule,

buy 'low' and sell high. How are prices of the stocks? Gas at the pump has increased significantly in recent weeks.

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Response to progree (Reply #3)

Mon Apr 18, 2016, 10:07 PM

7. What's your opinion on shell oil?

 

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Response to craigmatic (Reply #7)

Mon Apr 18, 2016, 10:38 PM

10. Nice dividend yield, 7.24% :-)

http://www.morningstar.com/stocks/XNYS/RDS.A/quote.html

Actually I don't have an opinion on any individual stocks. I'm a fund investor, and mostly index funds at that.

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Response to elleng (Reply #1)

Mon Apr 18, 2016, 09:56 PM

4. Shell oil is like 52 dividend is like 7%. Chevron is 98 dividend is like 4.4%

 

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Response to craigmatic (Original post)

Mon Apr 18, 2016, 09:20 PM

2. I think there is the long-term headwind of climate change - divestiture and the indisputable

fact that we have to leave a lot of the earth's fossil fuel reserves in the ground if we are to have any chance of keeping global warming below catastrophic levels. Thus stranding a big chuck of assets (do current valuations reflect this reality?).

Seems like about every month I read of another pension fund or sovereign wealth fund or university divesting from all fossil fuel companies.

On dividend yields, I looked at only three: XOM (Exxon Mobil) 3.4%, CVX (Chevron) 4.34%, and BP 7.73%. Hmmm

That said, I was a big energy enthusiast and luckily happened to buy a lot of Vanguard VGENX in 2009 near the bottom of both the financial and oil market -- rode it way up and, yes, rode it back down.

http://www.morningstar.com/funds/XNAS/VGENX/quote.html

I'm looking to shift to a good alternative energy mutual fund or ETF that doesn't have obscene expense ratios.

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Response to progree (Reply #2)

Mon Apr 18, 2016, 09:59 PM

6. yes the climate change argument is persuasive. Ideally I'd like to get into Tesla or technology but

 

those stocks are out of my price ceiling. I'm a conservative investor and a huge fan of dividends.

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Response to craigmatic (Original post)

Mon Apr 18, 2016, 09:57 PM

5. Buy 100 BP and sell a covered call, Jan. 2017. Then, buy a $25 put, Jan, 2017

 

.

Your 7% yield will turn to about 20%.

The caveat is that there is a powerful amount of money betting that the stock will go even lower.

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Response to Hoppy (Reply #5)

Mon Apr 18, 2016, 10:17 PM

8. You sound really good at this.

 

That's too rich for my blood I'm just dipping my toe in the waters right now so to speak. I got my eye of this shell stock and I was hoping it would drop today but it didn't stay down for long. I'm betting we see gas go back up to the 2.10's sometime in the next 2-3 years.

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Response to craigmatic (Reply #8)

Mon Apr 18, 2016, 10:26 PM

9. The strategy I described, works best in stocks that trade weekly options and are high volatility.

 

Example: Goldman Sachs.... Trading now at $159.00

You can buy the May 27th, $155 put at $4.00. x 100 = $400.

You can then sell the $160.00 call, week after week for about $2.00 each week. You can do that until May 27th. when you start all over. Potential profit, approx. $1,000 for the cycle.


If the stock goes below $155. on May 27, you still win.


This is a simplistic overview of the strategy, but study it with Facebook, Apple and so forth.

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