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Energy Remains No.1 Investment In 2021

Mar. 03, 2021 8:45 PM ETFCEL, EOG1 Comment
Daniel Dicker profile picture
Daniel Dicker


  • The energy renaissance continues apace for 2021 - both traditional O&G and Green stocks.
  • Both still have incredible potential for 2021 upside.
  • Call option selling is uniquely profitable right now, and particularly for small individual investors.

Both traditional fossil fuel and green energy stocks have been the investment story of 2021, and are likely to continue in my view at the top of sector opportunities throughout the rest of the year. But we know as investors that the job of finding good investments is not limited to figuring out the sector trends that are working. Sure, oil and gas are making a great comeback in 2021 compared to the previous five years. And yes, green stocks, led by Tesla (TSLA), have been an even longer darling of the markets, combining the hype of renewable energy with the sexiness of technology stocks.

But knowing all this is hardly enough. First, there is the fundamental job of weeding out the real opportunities from the hundreds of potential energy plays out there, then comes the job of timing the entry and finally, and this may be the most important, using the right strategy in managing the investment – the timeline, the limits for exit and the added importance of adding or subtracting from positions while they are being held.

That’s a lot for any individual investor, never mind for a professional manager. But there’s one strategy that’s available right now that’s particularly useful for us as individual investors with relatively small portfolios that’s not available to larger managers and funds: covered call selling.

I want to talk about covered calls as a perfect strategy for taking advantage of the particular situation that faces us today with both traditional and green energy stocks, poised as they are for a very good 2021.

Why am I complicating our trades with options? Three reasons: First, the historical volatility of options for many energy issues are very, very high right now, making the opportunity of premium selling particularly profitable. Second, the ability of small investors to put on option positions, is

This article was written by

Daniel Dicker profile picture
Dan is a former contributor at CNBC as well as former contributor at Realmoney.com and OilPrice.com where he writes on the energy markets and investing in the energy space. He has also lent his expertise as an oil markets analyst in hundreds of live radio and television broadcasts on Bloomberg, CNBC, Nightly Business Report, CNN, MSNBC, and ABC News, among others. http://www.dandicker.com/

Analyst’s Disclosure: I am/we are long FCEL, EOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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