Monday, 1 December 2014

Options Trade - Suncor


I've been buying stocks since October 2008, and have been generally pleased with my picks and performance. But I admit that the current $6,000 paper loss on ESV has rattled me. When I bought, everything said "screaming buy". And today, I'm thinking the dividend may disappear! I still believe ESV will recover when oil prices increase and will continue holding.

On a more positive note, this morning I was looking to buy shares in an oil & gas company, but ultimately settled on selling a put option in SU.

Sold 1 SU Put Jun 19 '15 $36 Put @ 3.40 ($11.20 commission)

Days Held (sell date to expiry): 200
Net Premium: $328.80

Annualized Return = ($328.80 / ($3,600 - $328.80)) * 365/200 = 18.3%

The most likely outcomes of this trade are:
  1. Shares are trading above $36 at expiration. I will get to keep $328.80 in net premiums.
  2. SU is trading below $36 at or before expiration and shares are assigned. I will receive 100 shares of SU at a net cost of $32.71/share.

2 comments:

  1. ESV dividend is safe. they have a payout of 36%. SDRL has a payout of 141%. I would buy more of ESV but they are full position now. I am going to buy BBL .

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    Replies
    1. I sure hope you're right about the dividend not being cut. I'm not worried about the next couple quarters, but if oil stays in the $60 range for some time, ESV may run into some difficulty. I noticed several bloggers bought some BBL. I would have joined in if it weren't for my short put. Happy hunting!

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