Message Font: Serif | Sans-Serif
No. of Recommendations: 0

I'm somewhat encouraged by todays market action, we've recovered nicely after making a new low at 16 1/8. However, I would like to see OIL stop making new 52 week lows every day.

I think that the new CEO would have sought to get all the bad news out, and take a large writedown on assets so that forthcoming numbers look much improved (and he can say he turned the sinking ship around).

To answer your question, I see OIL as a good turn-around candidate, with the extra sweetener that I give it reasonable chances that it will be gobbled up by a larger oil concern. I'm not outrageously bullish on the oil sector, especially if as it appears, the global economy is headed for a slowdown. However, it is good diversification for my portfolio.

Additionally, my entry strategy of selling 17.5 puts was relatively conservative. Like I said, if OIL rallies above 17.5 I pocket the $500+change premium. If it doesn't I effectively bought OIL at 16.5 (not too far from its current 52 week low). If I do get exercised, I will probably continue to work the position (by writing covered calls at 17.5 or 20 )against it to bring my average cost down.

Lastly, a move back up to 20 would represent a 20% gain from todays levels. Not a bad risk/reward in a still overvalued market.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.