XEC - Updates

I first started the trade on August 16th 2010 with a covered call.



All the fundamentals were listed clearly. It is a solid stock.

But it was the wrong timing. There were the Hindeburg Omen, S&P falling on the verge to break down its reversed Head and Shoulder and the sentiments were very negative. I decided to hold off the trade, and took a small profit.

All the negative sentiments were proven wrong. XEC began to climb again. I decided to get back on the trade on Sept 7.

I bought the stock for 66.95 and sold at Oct, 65 SC for 2.55.

I was still negative on the market but I like the stock. I did a ITM covered call.

Cost position: 64.45

On Sept 9th, I confirmed the bullish move on the stock after RIG announced that it had limited the liability on the BP's oil spill. It was bullish for all drillers. The market also looked positive.




I roll the Oct 65 SC to Oct 70 SC

I bought back the Oct 65 SC for 1.65 for a profit of .9 and sold another Sct 70 SC for 2.55.

My new cost basis is now: 64.45+1.65-2.55 = 63.55

On Oct 5th, the stock continued its bullish trend and was breaking up. Since I am keeping the stock, I decided to roll the SC up from Oct 70 to Nov 75SC.

I bought back the Oct 70 SC for 2.2. There was a profit of .3. I sold the Nov 75 SC for 1.85.

My new cost basis is now 63.55 + 2.2 - 1.85 = 63.9.

The stock as of Oct 8th closed at 75.65. I am now holding to a paper profit of 16.8 percent.

I do not intend to let the stock go ITM. If the trend is still positive, I may still roll the SC up. However, I have enough time till Nov expiry to decide.

If the stock breaks down, I may need to roll the call down.

Bottom-line, I am holding onto this stock until the fundamentals changes to negative.

I will continue to update my blog on this trade.