Tuesday, September 7, 2010

XEC - Covered Call


I closed this trade on August 23rd. I was nervous about the market. It could have broken down.

Fortunately, the market withstood the support and rallied.

I mentioned I will get back to the trade.

I like the fundamentals of this company. It was explained on my previous post: http://zpring.blogspot.com/2010/08/xec-covered-call.html

Today, I see a good set up for the trade. Price has tested support and rebounded. It may test 64 again but there are good support at around 63-64.

Trade:

Buy stock at : 66.95
Sell Sept 65 SC at 2.55

PE: Let SC goes ITM and call out the stock. I will make 1% in 2 weeks. I may roll out the SC before expiry if I remain bullish on the overall market.

SE: If the stock breaks down below 65, roll the call to Oct 65 or lower.
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1 comment:

  1. InnovestorSeptember 10, 2010 at 4:17 PM

    This trade is going nicely.

    Today, news that transocenan (RIG ) may settle with BP for $1-$2b liability send oil driller stock higher.

    I believe XEC will outperform compared to the others.

    I have decided to move the ITM Oct 65 SC to Oct OTM 70 SC as a bullish adjustment.

    Trades:

    BTC Oct 65 SC for 1.65
    STO Oct 70 SC for 2.55

    This brings the cost basis for the trade to :

    66.95-2.55+1.65-2.55 = 63.5

    September 10, 2010 3:38 PM

    ReplyDelete

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About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

Disclaimer

These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions, market or stock performance. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy of these external sources. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult your professional adviser.