December 2nd evening
Topic: Trade Rationale
Working with You One-on-One:
I am not a registered representative. I am not a stock broker. I can provider unique ideas. You make the final decision, of course, but I can explain why we are doing any suggestion.
I really think there are some great opportunities in the market by playing both sides of the market: up & down. Tax
loss selling. Managing risk. Todd
Ask Alex for an inexpensive subscription to Big Deal. We can use options here
and eliminate most serious down turns. Below are the basic strategies I am using with stocks, MLP’s, hedging.
I don’t know anybody who knows which way oil is going. It’s up or down. Options have a lot of volatility premium built in. I expect to do very well with our positions.
The strategies leave on with a “fill in the blank” with what stocks to use.
2. Buying Puts on Oil Stocks.
3A. Buying 2-3 puts for every 100-shares of an oil/MLP equity. This is my preferred way.
3B.We can sell weekly calendar put spreads for income
. We can use part of these funds
to buy OTM calls, OTM LEAPs. We make money
in total. We will make money
with both up and down oil markets.
Todd’s Overall Strategy:
What am I using: I am using strategy #3. I am also buying stocks that are working: a) airlines due to cheap oil; refineries due to cheap oil; $CLMT benefits from cheap oil.
Biggest Risk for Oil, MLP, Natural Gas Positions that may need to Borrow
can cut back the borrowing limit. This is when convertibles are established. I would say it is 75% professionals shorting the stock in a convertible deal. They are locked in a profitable trade. Many oil companies will go bankrupt after selling assets for pennies on the dollar; convertible deals to raise funds; and a simple lack of hedging by the current management team in place.
Big Deal or Privately
I will put together short selling oil positions
, buying naked puts on oil positions
in the Big Deal holdings or personally.
Strategies: Combining Various Risks
1. The above strategies are all I am doing for positions that are falling apart
. I am hedged by buying cheap OTM calls if there is a rebound.
2. The interest rate
environment is a key factor to factor into positions.
3. We could have a lot of December liquidations for tax loss selling. I will buy those positions that fall within the 1-3 categories or are the typical type stock we own. Airline stocks have done very well as cheap oil ensure hedges are cheap for the future and current EPS are attractive. Delta and $ALK did very well today.
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