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Del
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Post by Del »

sweetandsour wrote: 02 Nov 2022, 09:28ping
I put a great long-term trade on XLE yesterday. I'm inviting you to copy and join with me.

Are you as confident and bullish on XLE as I am? The energy sector has a lot of room to grow. Lots of profits while oil prices are so high. And when Biden and Putin are retired to their prisons, the energy sector will lead the world recovery.

Meanwhile, the P/E ratio for major energy companies is close to 10.0. This is still absurdly low.... historical average is 30, and the current S&P average is 19.65. XLE price should double -- just to get back to the low side of normal.

The sector is only suppressed due to woke investing policies, and that's already starting to break apart. Pressure from several US state governments divesting their pensions from Blackrock holdings is having a huge impact.

More aspicious signs -- high demand during winter. election. etc. XLE shook off the market panic of Tuesday on the next trading day, proving how robust the sector is. It didn't drop below support during the panic, to begin with.
============================================

Here's my trade. I bought March calls for a delta of 100, to mimic holding 100 shares. Then I sold covered calls to expire in two weeks. I'm going to hold this for a month and evaluate. I reasonably expect to make $1000, more or less.

Here's the set-up:

At 11:30, XLE is trading at 90.5, same when I bought yesterday.

Open option chain for March 17. Find option with delta of 0.6 (it will be slightly in the money). Currently, this is at strike 85 (that's what I bought yesterday). Trading about close to $10.0. So $1000 for one contract. (I bought two contracts, but you can pick your own position).

With two contracts, my delta is $120 profit for each $1 increase in XLE, which is close to the 100 shares equivalent that I was looking for. I have $2000 and change invested in the position. I expect to make $800 to $1200 by early December.

When you have purchased the option(s), you now control 100 shares per contract. You can sell covered calls on these options. You can skip this trade if it's too complicated to track, but you know how covered calls work. And "fifty bucks is fifty bucks."

Keep these short -- one or two weeks. I sold Nov. 18 options. Always look for the option with a delta of 0.1, and verify that this looks high enough to give you just 10% or so chance of getting called out. We don't want to be forced to unwind the position before we want to.

I sold Nov. 18 options at strike 99, currently trading at .26.

The cash from the covered call will pay for the time decay on the long options.
Last edited by Del on 04 Nov 2022, 09:51, edited 2 times in total.
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Post by Del »

Jocose wrote: 04 Nov 2022, 09:47 Image
Hmmm.... Silver futures popped 5% this morning. Copper surged 10%. I wondered what was up with that.

Geopolitically.... India is a in great position.

China is tied up with persistent covid paranoia, focus on taking Taiwan by force while America is weak and distracted, and enduring certain sanctions and isolation due to international mistrust of the political dictatorship.

America's got our own self-inflicted problems.

India is thinking -- "What if we don't be crazy, and just continue building up and putting our billion peoples to work?"
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Del wrote: 02 Nov 2022, 20:26 Unfortunately, I was watching the market as this happened. Boy, did I make a mess of things.

I bought another call on SPY as the market surged with initial excitement. SPY climbed back into its channel, and I reckoned it would bust through resistance in a day or two and take off. I bought at the top of the surge, near 386.5 --then the bottom fell out.

I bought a second call at the end of the day, when price movement slowed a bit near 375.

I am now (gulp!) $1000 in the red on SPY. I will break even if and when SPY returns to 384 or so.

I just need to let the bears get done ravaging, and wait for the bulls to come grazing back.
In case anyone cares, my option position on SPY reached break-even today. I closed it with a net $57 profit.

I don't trust SPY for long-term hold. Too many tech stocks. Volatile and skittish, dropping in a panic on bad news. And there's lots of bad news ahead.

- The election is today. Market has priced in a Republican take-over of Congress.
- Inflation news for October comes out on Thursday morning. It looks neutral, but market could react if inflation is better or worse than expected.
- Mr. Market is still oblivious to the reality that Biden's wasting of our strategic petroleum reserve must come to an end shortly after the election. Fuel prices could spike badly -- and inflation with it -- in the coming months. Shortages of diesel and fuel oil are already a problem.
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Post by sweetandsour »

SPY is climbing today; it's crazy. I have a sell order at 400 for my few remaining SPY shares, which will net ~$200.

Yesterday and again this morning was a good time to buy XLE; but I'm still studying Del's position listed above, and it's usefulness for me at the moment. I'm signed up for some options trading classes today and next week.

I read that Russia is retreating from some major Ukraine cities. I suppose this could be either good or bad, depending on the Russian intent. Lots of possibilities that could affect the energy sector.
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Post by Del »

sweetandsour wrote: 10 Nov 2022, 09:16 SPY is climbing today; it's crazy. I have a sell order at 400 for my few remaining SPY shares, which will net ~$200.

Yesterday and again this morning was a good time to buy XLE; but I'm still studying Del's position listed above, and it's usefulness for me at the moment. I'm signed up for some options trading classes today and next week.

I read that Russia is retreating from some major Ukraine cities. I suppose this could be either good or bad, depending on the Russian intent. Lots of possibilities that could affect the energy sector.
SPY closed up high yesterday, led by exuberance in the tech sector. Energy was not leading the market.

All the same, it's good to see SPX above 3900 again. I hope the strong support level still holds.

XLE is behaving well during this volatility. Not manic, like the tech sector.

I bought the option when XLE was trading at 90.5 on Nov 3, intending to hold the position for a month. It closed at break-even yesterday.

You can do the call option trade just like you do ETF's -- hold for a day or less, if you want. You can make $800 on the same SPY trade that's giving you $200. Or you could close the SPY position at 394 when market opens this morning and still make more than $200 -- a lot more safely than waiting for 400. I hope Mr. Market doesn't wake up with another hangover.

You will enjoy the introductory options courses. Options have a few more moving parts than simple stocks or ETF's.
===============================

I'm wishing that I had held on to that copper, but there's no way that I could have predicted these recent surges in price.

An example of setting up a good trade based on available information, but then there comes an unexpected event with an adverse result. It happens sometimes.
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Post by sweetandsour »

Del wrote: 11 Nov 2022, 05:14
sweetandsour wrote: 10 Nov 2022, 09:16 SPY is climbing today; it's crazy. I have a sell order at 400 for my few remaining SPY shares, which will net ~$200.

Yesterday and again this morning was a good time to buy XLE; but I'm still studying Del's position listed above, and it's usefulness for me at the moment. I'm signed up for some options trading classes today and next week.

I read that Russia is retreating from some major Ukraine cities. I suppose this could be either good or bad, depending on the Russian intent. Lots of possibilities that could affect the energy sector.
SPY closed up high yesterday, led by exuberance in the tech sector. Energy was not leading the market.

All the same, it's good to see SPX above 3900 again. I hope the strong support level still holds.

XLE is behaving well during this volatility. Not manic, like the tech sector.

I bought the option when XLE was trading at 90.5 on Nov 3, intending to hold the position for a month. It closed at break-even yesterday.

You can do the call option trade just like you do ETF's -- hold for a day or less, if you want. You can make $800 on the same SPY trade that's giving you $200. Or you could close the SPY position at 394 when market opens this morning and still make more than $200 -- a lot more safely than waiting for 400. I hope Mr. Market doesn't wake up with another hangover.

You will enjoy the introductory options courses. Options have a few more moving parts than simple stocks or ETF's.
===============================

I'm wishing that I had held on to that copper, but there's no way that I could have predicted these recent surges in price.

An example of setting up a good trade based on available information, but then there comes an unexpected event with an adverse result. It happens sometimes.
It never did reach 400; the closest it got was 399, and I sold it at 398. So, a little less than $200, but I'm now out of the market entirely with this small account of mine at the moment. It's all in cash, and the SPX is on a high, and I'm ready for something more profitable, again.
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sweetandsour wrote: 11 Nov 2022, 20:22 It never did reach 400; the closest it got was 399, and I sold it at 398. So, a little less than $200, but I'm now out of the market entirely with this small account of mine at the moment. It's all in cash, and the SPX is on a high, and I'm ready for something more profitable, again.
My option trade on XLE has $391 gain. I'm still holding it open.
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Post by sweetandsour »

Del wrote: 12 Nov 2022, 05:47
sweetandsour wrote: 11 Nov 2022, 20:22 It never did reach 400; the closest it got was 399, and I sold it at 398. So, a little less than $200, but I'm now out of the market entirely with this small account of mine at the moment. It's all in cash, and the SPX is on a high, and I'm ready for something more profitable, again.
My option trade on XLE has $391 gain. I'm still holding it open.
I had forgotten that you bought some CPER; I see it's dropping some in pre-market this morning. A golf buddy of mine bought it earlier this year, along with CAT, thinking that the Ukraine conflict would be short lived, for some reason. I don't know if he sold his CAT recently; he bought when the price was <200.
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Post by Del »

SPX has climbed back onto the old mattress at 3900. The index appears to be establishing a new level of support at 3950.

Inflation, I suppose.
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