Patrick's Rants


EGY Today

Filed under: Money,Stocks — site admin @ 9:51 pm

If you had bought EGY when I had and hung onto it like I did you might asking yourself, “why?” right about now. The answer should be, because it’s going to go up to the price that I saw in the chart. It might be a bit of a wait though, since profits came in really low and the PE shot up to over 1000… I like lower than 20, so something has to change here.

This could be a stock that sits in the portfolio that I sell calls against. The October 7.50 calls (just below break-even) are selling for $0.60. This is not what I bought the stock for, but one reason to look at stocks that have the three “income” components: Dividends, Options, and the biggest component, Capital Gains. EGY doesn’t currently pay dividends, so we have to make our money on the appreciation and the options. Option pricing is pretty darned good for a stock with this high of a PE (it could be they are all winding down and all the purchases are from speculators who sold them when they were higher, but someone is selling them) and selling for $0.60 increases the profit of just closing out. Selling these options, I would be hoping to be called out – or not. If I’m not, sell them again. If I am I take 2/3 of the position size out of my account. Part of the reason I haven’t sold the calls is I really want to sell all 150 shares and selling calls that tie up just 100 shares increases transaction costs. So I wait a little and ponder the options.

This is what I’m doing in my account and not a recommendation that you take the same financial beating that I do

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