here is a typical energy trade, and a stock trade of mine, the good, the bad, and the ugly.
1. sell CNQ (cnd natural resources ) Feb 40 puts for 1.50
so basically for every 100 shares (1 contract) get $150 and agree to buy cnq for $40 cdn. (in cdn. dollars and options on montreal, though this stock and options trade in the US)
the stock was in a range of 42-44cdn. and thought it was good value plus like the premium, as I sold these in late dec, early jan.
2. CNQ falls and around the week it is expires stock goes from 44 to 38...
3. so increase my ownership stake in CNQ by 70% from my orginal holding.
worried about how a major holding is acting and oil sell a $40 cdn. covered call April. for $3.50cdn.
so now the shares that I have put to me, agree to sell those same share for $40 cdn. until April.
4. the bad, and the ugly
CNQ shoot up on the Petro and Suncor merger news, also oil has rallied with the market to below 45 to 53.
so cnq is now at 52.04 cdn., a dumb move on my part.
however I will tell myself made $5 a share......also gave a huge windfall to someone else...:shrug:
Petro Canada and Suncor are going to merge, own Suncor in the DRIP/SPP long term holding and petro Canada in a trading account..much smaller amount.
we have talked about these companies before, this deal make sense for both....suncor has long term oil sands operations...but will require more cash to expand them.
petro canada has short term assets ie. 10-15 years (have some longer term ones to) and the cash flow from these can pay for suncor operations.
by the way all of my petro canada has covered calls of 32 april, which was looking good until today... I got $2 upside, the stock is now at 36cdn. (Also trade in the US). see CNQ example.
forgot to mention both companies believe cost savings of 1-1.3 billion in year one. and more going forward. this is very important espcially if oil falls below 50.
thanks
selkirk
1. sell CNQ (cnd natural resources ) Feb 40 puts for 1.50
so basically for every 100 shares (1 contract) get $150 and agree to buy cnq for $40 cdn. (in cdn. dollars and options on montreal, though this stock and options trade in the US)
the stock was in a range of 42-44cdn. and thought it was good value plus like the premium, as I sold these in late dec, early jan.
2. CNQ falls and around the week it is expires stock goes from 44 to 38...
3. so increase my ownership stake in CNQ by 70% from my orginal holding.
worried about how a major holding is acting and oil sell a $40 cdn. covered call April. for $3.50cdn.
so now the shares that I have put to me, agree to sell those same share for $40 cdn. until April.
4. the bad, and the ugly
CNQ shoot up on the Petro and Suncor merger news, also oil has rallied with the market to below 45 to 53.
so cnq is now at 52.04 cdn., a dumb move on my part.
however I will tell myself made $5 a share......also gave a huge windfall to someone else...:shrug:
Petro Canada and Suncor are going to merge, own Suncor in the DRIP/SPP long term holding and petro Canada in a trading account..much smaller amount.
we have talked about these companies before, this deal make sense for both....suncor has long term oil sands operations...but will require more cash to expand them.
petro canada has short term assets ie. 10-15 years (have some longer term ones to) and the cash flow from these can pay for suncor operations.
by the way all of my petro canada has covered calls of 32 april, which was looking good until today... I got $2 upside, the stock is now at 36cdn. (Also trade in the US). see CNQ example.
forgot to mention both companies believe cost savings of 1-1.3 billion in year one. and more going forward. this is very important espcially if oil falls below 50.
thanks
selkirk
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