User 305589

Fuel Your Portfolio with These Option Strategies

I suspect that seasonality may not be as reliable this year. A lot of money has already piled into oil and metals in anticipation of an economic recovery AND of the usual seasonal trend in oil. So, oil may still peak in July, but may have little upside left from here. And, since oil stocks usually lead the price of oil, your play could turn pretty bad with a vengeance. Oil stocks are very overbought and could easily correct by 20-30% short term. Imho, it is not worth the risk to play that kind of strategy right here right now. the lower vix (and lower call premiums) don't help, either.
There are much better ways to make 6-10% over the coming 6-7 weeks than your covered call plays. their risk-reward is simply not worth it imho.

Option Spreads With Large Upside and Limited Downside

hm, let me get this straight: you talk of 'large upside and limited downside' - yet when looking at your vertical call spreads that you suggest, you have an upside of 108-150% and a downside of - 100%(!!)
I am myself doing a variety of vertical call spreads as well as calendar spreads, but frankly, your suggested trades look more like a gamble.
Your strike prices are so precariously close to each other and at the same time mostly out of the money and pretty near to expiration. For instance, the SPY calls with 92 strike have only a slightly higher probability of expiring in the money than have the 93s. It's basically a coin toss, imho.

I do like call spreads, though, but I use them either with long term options for stocks that are grossly undervalued imo, and then I go quite deep out of the money for 3.1 or 4:1 upside/downside.
Or I may target stocks which I consider to be a t rock bottom valuations with very little downside left and then chose calls that are in the money while selling calls at or slightly out of the money.

Goldman Sachs Busy Editing Conviction Buy and Sell Lists

These hectic changes to their buy- and sell-lists are exactly what you would expect from GS which has already played a quite dubious role in the market meltdown as well as in its recent melt-up. You would have to be very naive if you thought that their trading desk hasn't positioned itself ahead of publishing these changes to take full advantage of the herd's reactions. I wouldn't be surprised at all when most of their additions to the buy list were stocks their trading desk has accumulated over the past week and is only too eager to sell now at higher prices. Likewise, the new conviction sells may well consist of stocks that GS has shorted and would like to cover at lower prices.
beware following Goldman's advice. GS makes money from its clients - not for its clients and their market calls are not to serve you or me but to only serve the folks at GS.

Dow 10,000 and More Irrational Exuberance

9000, 10000 Dow - well possible. Hold on to positions, but with ever tighter stops. It makes zero sense to jump into new positions after this bull-run, yet this is what a lot of people are contemplating here (fear of missing the next bull) and ultimately will really do. Dow 9000-10000 would be great - to cut positions big time and build cash. 3 months ago nobody could have enough cash and opportunities were everywhere. most people were either too scared or didn't have the cash to take advantage of them. Over the next 18 months we will have a similar situation again - with lots of opportunities while cash to buy them will be king again.This rally is a golden opportunity to rebuild and´rebalance the portfolio and to prepare for the real bottom - which may be years away.

On May 02 01:10 PM Freya wrote:

> The Nays have it by a vast majority, I excluded Marc's responses.
>
>
> Just based on your comments and the Fact that Indicators like "Sell
> in May" and go away prove to be wrong when everyone knows and quotes
> it, I have no choice but to continue to be fully invested on the
> Long side.
>
> Dow 9,000 before another steep drop.
>
> The results of the stress tests were leaked, Chrysler was telegraphed
> long before it happened. The Public is not participating, big deal.
> This is normal, they do not get in until near the top anyway.
>
> The US this and the US that, This "Bear Rally/Bull Trap" is Global.
> I can understand the normal corrupt, manipulation expected here.
>
>
> The up move started in Asia and Russia. Not here.

Natural Gas Is Heading to 1997 Levels, Should Stay There Awhile

that should read CHK's chairman...
sorry for the typo


On Apr 28 05:41 AM User 305589 wrote:

> good article. However, the market has been looking at this for the
> past 6 months or so - the current depressed NG prices are depressed
> precisely because of these bearish factors. While oil has risen 50%
> off its lows, NG is making fresh lows, defying the long established
> crude-ng price relationship.
> The point is: there will be U:S. companies forced to produce a lot
> of NG even at $3 NG or below. But there are a lot who are not and
> who will not sell their Ng below 4$. They will simply produce as
> much as they need to keep their lights on and will wait for prices
> to improve rather than virtually give away their NG reserves. And
> rest assured, the administration in DC will not sit idle watching
> the destruction of the U.S. natgas industry which forms a center
> piece of their future energy policy. Expect nothing less than significant
> tariffs for LNG imports.
> I have no idea where Ng prices will be a year or two from now. But
> my bet (and my money) is with strong low-cost producers like mcf
> and chk. CVHL's chairman over the past years has been pretty good
> in judging the market and he has hedged the company accordingly..
> he has been cautious on NG, too and not ruled out price weekness
> to last well into 2010.
> Still, at 3-3.50$ a lot of production will simply go off the market,
> so i simply don't see it to fall much lower from here. it may rise
> back into the $4-$6 range gradually as the low prices attract additional
> demand and additional uses.

Natural Gas Is Heading to 1997 Levels, Should Stay There Awhile

good article. However, the market has been looking at this for the past 6 months or so - the current depressed NG prices are depressed precisely because of these bearish factors. While oil has risen 50% off its lows, NG is making fresh lows, defying the long established crude-ng price relationship.
The point is: there will be U:S. companies forced to produce a lot of NG even at $3 NG or below. But there are a lot who are not and who will not sell their Ng below 4$. They will simply produce as much as they need to keep their lights on and will wait for prices to improve rather than virtually give away their NG reserves. And rest assured, the administration in DC will not sit idle watching the destruction of the U.S. natgas industry which forms a center piece of their future energy policy. Expect nothing less than significant tariffs for LNG imports.
I have no idea where Ng prices will be a year or two from now. But my bet (and my money) is with strong low-cost producers like mcf and chk. CVHL's chairman over the past years has been pretty good in judging the market and he has hedged the company accordingly.. he has been cautious on NG, too and not ruled out price weekness to last well into 2010.
Still, at 3-3.50$ a lot of production will simply go off the market, so i simply don't see it to fall much lower from here. it may rise back into the $4-$6 range gradually as the low prices attract additional demand and additional uses.

Natural Gas Is Heading to 1997 Levels, Should Stay There Awhile

quite to the contrary. the glut of lng combined with depressed demand will put huge pressure on margins for lng terminals.
cheniere is a stock i wouldn't touch in this environment


On Apr 27 03:52 PM Amouna wrote:

> A good play for this would be long Cheniere Energy (seekingalpha.com/symbo...).
> Their stock will take off to the moon in a matter of months....

Chesapeake Energy CEO in Questionable Compensation Deal

Mark, you are spot on when it comes to the compensation excesses and the poor coroporate governance in the USA. However, in the case of CHK and Mclendon, one cannot deny that the guy really created lots of shareholder value (despite of the stock's crash in 2008) and that a lot of this was truly due to his expertise and skills. He did make a huge difference. Whether that is worth 75 million in additional compensation is open to debate, of course, but the matter of the fact is that he added real value in a very material way.
Now, take companies like BAC, Citi, MER or Goldman. Herer you have vastly overpaid crooks nrunning essentially ppnzi schemes and being rewarded with real cash for virtual (and quickly disappearing) phony profits. These are the posterchilds. So imho, CHK is not the best example, though the article is spot on when it comes to its general target , America's corrupt, rigged system of company oversight.

Why Is Oil Trading at $53 When Supply and Demand Is So Bearish?

rig count for nat gas has fallen more than 40%. you just can't shut down a well overnight. a 45% cut is a hefty one, no? CHK estimates it may get down to a 60% cut in rigs by q3/q4 this year.
I am bullish for selected nat gas companies but unfortunately, a glut of Nat gas is inevitable for the next 9-18 months given the huge supply of LNGs hitting the market. CHK has hedged very prudently (I think the company is heavily underrated by the market) while many others have not. MCF is a low-cost producer that will survive and then thrive as well. But i expect no short-term catalyst for nat gas stocks.


On Mar 24 09:14 AM long_on_oil wrote:

> When the price of oil was high the oil companies tried to maximize
> profits by drilling new wells and increasing supply. Now that the
> price is low the opposite will be the rule. The stockholders must
> demand profit maximization irregardless of the price of oil. This
> is just business 101.
> Why the natural gas companies aren't cutting production is beyond
> me. We stockholders should be writing our management to insist they
> cut production to protect our investment. We are tired of giving
> our product away. No responsible management of any successful company
> operates like these natural gas companies.

Your Oil Stocks Aren't Coming Back

hm, I have no idea, whether the integrated oil companies already saw their "peak earnings". Available evidence for the longer term trends in oil and gas suggest, however, that we will see very hefty spikes in oil and gas prices down the road. Whether the companies can make money from those or get killed by them, is an open question though and depends to a great extent on the mgmt of the various companies. let's be clear about it: When Matt Simmons, who undoubtedly is a very profound industry insider, sees the real danger of oil and gas price volatility destroying the entire industry, then you ought to listen!
That being said, I look at the valuations of a company like CHK or MCF (which are very different companies in the same industry (nat gas)) and I say, boy, this market IS crazy! These copmanies do not need $12/mcf in gas prices to generate huge profits. they could live with $6-$7 just very very fine - when most other companies in that business will struggle and cut production left and right.
CHK at $15 and MCF at $36 are so screaming bargains, that I could not care less whether or not their earnings or stock prices or both will ever surpass their historical peaks. Just a return to a normalized economic and commodity environment would make their stock prices double or triple from here - and still be very very reasonably valued.