New-born Baby's Cans: Making Money in a Down Market

[Rob]

It is possible that you will be correct, and oil will be $150. But what kind of inflation will that bring? And what kind of slowing of the global economy will that produce?

The buggy whip manufacturers will rise like the Phoenix from the ash heap of history.

[New-born baby]

The buggy whip manufacturers will rise like the Phoenix from the ash heap of history.

Yes indeed. The trouble with horses: they eat even if they are not being used.

[rrrhumba]

CanRoys

Greetings from a newbie to this site. Well, long time lurker, short time registered,
TFred, your idea of buying into CanRoys now and holding for your daughter's future says volumes about you and your value system. Whether or not oil or NG goes through the roof, a long term investment that pays 15% or so in dividends per year can't hurt you, or your daughter. I met NBB a few years ago on the internet and am very, very impressed at what he has learned and brings to the table each day. But each of us has to manage our own financial situation. Commodities are VERY volitile, and so we have to hold our breath alot, but if we hold through the ups and downs we are still getting that 15% return month in and month out. I can't believe NG or oil will go to zilch any time soon, so even if some CanRoys have to "reduce" their divys to say 9-12%, that's still income every month or quarter. You've got a good plan. Hang in there.
rrrhumba

[New-born baby]

Greetings from a newbie to this site. Well, long time lurker, short time registered,
TFred, your idea of buying into CanRoys now and holding for your daughter's future says volumes about you and your value system. Whether or not oil or NG goes through the roof, a long term investment that pays 15% or so in dividends per year can't hurt you, or your daughter. I met NBB a few years ago on the internet and am very, very impressed at what he has learned and brings to the table each day. But each of us has to manage our own financial situation. Commodities are VERY volitile, and so we have to hold our breath alot, but if we hold through the ups and downs we are still getting that 15% return month in and month out. I can't believe NG or oil will go to zilch any time soon, so even if some CanRoys have to "reduce" their divys to say 9-12%, that's still income every month or quarter. You've got a good plan. Hang in there.
rrrhumba

So glad to hear from the RRRRRRRRhumba. You are always welcome to post on my threads.

I bought NVG.UN for three of my children about 18 months ago. They paid 17.1% divy at the time. Then a reduction of the divy brought a fall in the stock price. Fortunately oil had a run higher, and after 18 months, I was able to get them out with a total profit of $100. (I had two other children in HTE, and they really made a killing). If I had waited and cashed them out today, they would have still been underwater. I cashed them out when the exchange rate was .9056, and today it is .8850. My point is that looking 9 years down the road is a hard thing to do. I like the Cans--even love some of them--but when the chart tells me something, my own personal rule is to listen.

I could be wrong; I've been wrong before.

[TFred]

Greetings,

As you well know I used to trade Cans trying to beat the distribution amount,since having done that for a while,the tax consequence and anxiety with following all the Cans IB offers seemed not worth the effort.

I realise $150 oil by 2015 seems unrealistic,but consider its 8% yoy appreciation,fairly tame by the last few years gains.Reading "Twilight in the desert" has convinced me to invest in Oil and NG for the future.

An oldie you liked before PMT is my next target,I'm finally buying when everyone else is selling,feels kind of good not to be chasing.Alot of folks are betting on NG being above $8 by fall.

The recent Anardarko purchase seems to illustrate that reserves are going to be at a premium.EOG looks like a target,any option play to capitalize on that one?

What do you think of the PnF 1 year for the $RTEN?The NG looks very impressive to me.

cordially Tom

[New-born baby]

I love the PMT

The recent Anardarko purchase seems to illustrate that reserves are going to be at a premium.EOG looks like a target,any option play to capitalize on that one?

What do you think of the PnF 1 year for the $RTEN?The NG looks very impressive to me.

cordially Tom

Tom,
I love, I love, I love the PMT. What a company! Great management! But I am watching this one and have not yet entered.

Andarko: they are either geniuses or fools. One thing for sure: they are not looking at a short term investment. They are looking long term.

EOG: Careful here. The daily has a "possible" inverted head and shoulders forming, (IF it busts the neck on volume), but the weekly looks like a head and shoulders top forming. In short: we don't yet know what this thing is going to do. Daily has a gap up on "news"--about another company, no less.

IF you bought a straddle based on the inverted head and shoulders, (the chart would target a $10+ move to $76+), you need to be aware that the straddle is not profitable until after the $71.15 marker (current price $66.06 means you'd be giving $5 of profit away, and risking $600+ that EOG does hit the target). I don't like that play myself.

BUY the OCT $65 call for $7.70. If you don't want to risk that much money, then ALSO sell a higher strike to help you finance the deal. How about selling the $75 JAN 07 strike for $5.50, and you only risk $220 per contract.

[TFred]

Greetings NB.

Since I last talked to you Oil has advanced to 75+,yet Cans are trading as if futures were in the $50s.

Im Beginning to question peak oil as an immediate concern,and a massive decline in Crude futures to follow.

T.B.Pickens claimed today demand will outstrip supply by 1 million bbls a day by fall,and causing $80 oil.He likes COS and SU.With the exception of ERF and formerly PTF,the rest stink.

BTE seems likely to raise dist based on low POR ratio,other than that,with oil at $75,Cans are definitely dead.Youu made a good call,how do you like CL's futures,I see $40s barring a major hurricane or war with Iran.After thoroughly reading "Twilight in the Desert",it seems based on worst case scenario,and apocalyptic bias.COS and SU will suffer terribly at $40 bbl,your PnF are correct with those.

With Oil dead,where do you like looking for trades?Some on the Bullboards are loking at REITs again,NFI,AHM.and others.

cordially Tom

[New-born baby]

Tfred

Greetings NB.

Since I last talked to you Oil has advanced to 75+,yet Cans are trading as if futures were in the $50s.

Im Beginning to question peak oil as an immediate concern,and a massive decline in Crude futures to follow.

T.B.Pickens claimed today demand will outstrip supply by 1 million bbls a day by fall,and causing $80 oil.He likes COS and SU.With the exception of ERF and formerly PTF,the rest stink.

BTE seems likely to raise dist based on low POR ratio,other than that,with oil at $75,Cans are definitely dead.Youu made a good call,how do you like CL's futures,I see $40s barring a major hurricane or war with Iran.After thoroughly reading "Twilight in the Desert",it seems based on worst case scenario,and apocalyptic bias.COS and SU will suffer terribly at $40 bbl,your PnF are correct with those.

With Oil dead,where do you like looking for trades?Some on the Bullboards are loking at REITs again,NFI,AHM.and others.

cordially Tom

Hi, Tom:
Lots of trades out there. Lots of nice, ripe charts. Hot Pick of the Day has a few recent charts I posted. I am currently trading STLD, ACI, BTU, possibly NSS and ABX (looking for $36). Look at some gold charts. That thing ain't done by no means.

I love NFI. Period. Nice REIT.

Here's an inverted head and shoulders bottom forming now: TLS. BULLISH baby BULLISH.

SU has had ten--count 'em--ten up days in a row. This thing has to be a decent short soon. Watch the action and sell the in the money calls. They drop almost as fast as the stock price.

I really think you might profit by taking a look at healthcare stocks. If inflation increases (very likely, imo), and a recession hits (very likely, imo), then healthcare stocks will rise.

Also, Tom, you can make some very safe plays by buying a bullish chart that has a decent option chain. Look for solid companies. Even XOM--and that's about as blue chip as they come--can provide you a conservative, safe 2.5% per month. Take STLD for example. Current price: $64.41. Had a retest today of support. Rich option chain. Buy the stock and sell the $60 call for $5.70 and earn $1.59 per share in just over two weeks with lots of safety.

And Tom, it sez right here that WTI crude will pull back tomorrow. It is up against huge resistance right here.

[Rob]

Buy the stock and sell the $60 call for $5.70 and earn $1.59 per share in just over two weeks with lots of safety.

Wouldn't that be $1.29?

[New-born baby]

Well. DUH!

Wouldn't that be $1.29?

Yes Rob, that would be $1.29. DUH! I stayed up too late!

[New-born baby]

Eog

BUY the OCT $65 call for $7.70. If you don't want to risk that much money, then ALSO sell a higher strike to help you finance the deal. How about selling the $75 JAN 07 strike for $5.50, and you only risk $220 per contract.

Tom
Did you play EOG? Those OCT calls are now $11.00. Turns out the inverted head and shoulders did happen. Nice call!

[TFred]

Greetings,

No I didnt play it,NG is nosediving,I didnt think EOG would hold up at all.Sorry if this has been Hijacked to an options thread.

May I ask,do you primarily look for the premuim when selling calls,or is it a hedge?

Your example of selling in the money calls on SU which are highly priced,your goal would be to buy some shares at a decent price,and sell deep in the money calls,looking for a pullback in order to pocket the premuim,and still keep your shares?

cordially Tom

[New-born baby]

Greetings,

No I didnt play it,NG is nosediving,I didnt think EOG would hold up at all.Sorry if this has been Hijacked to an options thread.

May I ask,do you primarily look for the premuim when selling calls,or is it a hedge?

Your example of selling in the money calls on SU which are highly priced,your goal would be to buy some shares at a decent price,and sell deep in the money calls,looking for a pullback in order to pocket the premuim,and still keep your shares?

cordially Tom

I play things two or three diffo ways:
Play one: buy a bullish stock with a good, stalked entry. If she rises past my buy point, watch the action until the chart says "she's going to pullback for a day or two." Then sell an in the money call that offers another $100-$150 or more in the next week or so, to lock in extra profit and also for protection.

PLAY TWO: find a stock that is topping, and sell an in the money call without buying the stock. As the option price falls, cover at an appropriate time.

PLAY THREE: buy a stock and realize "I goofed." Buy an in the money call at profit and don't take a loss on the trade.

[TFred]

Greetings NBB,

Your take on the options chain on XLE?

Looks rich,and a possible hedge against long oil positions if properly timed.

cordially Tom

[New-born baby]

Xle: headed down on 7/7/06

Greetings NBB,

Your take on the options chain on XLE?

Looks rich,and a possible hedge against long oil positions if properly timed.

cordially Tom

I think XLE moves South today.
You want a money maker? Buy almost any gold stock today.

XLE has a very rich and nice chain. I have never traded XLE, even though I watch it daily. I use it as an indicator of an oil stock's daily trend. For instance I will look at the XLE in the premarket to see which way the trend for any oil stock will be for that day, and sometimes I watch it intraday, too, to see if it is gaining strength in hopes that the specific stock I am trading is lagging XLE's reactions.

I looked at Thursday's action and I can tell you I expect XLE to pull back today, Friday. The last two days XLE volume was light, but the price movement was up (bearish indicator). Also yesterday's candle looked like an "out of gas" sign.

I do have this gripe about XLE: it trades pre-and post-market with lots of volume. It may make a big move with you on the sidelines and not really able to do much about it. For that reason I use it as an indicator only.