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Strategies & Market Trends : Option Strategies

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To: alanrs who wrote (1748)	8/24/2016 2:03:03 PM
From: Jim P.	Read Replies (1) of 2591

ARS I bought another slug of STNG this morning at 4.77. I want to sell covered calls and collect the September 12.5 cent dividend so the October calls are tempting me. Bid 25 cents right now so 37.5 cents of income on a $4.77 stock purchase 7.8% for 2 months if the stock price stays stagnant. I am glad I had some easy available cash this morning and have calls sold at higher prices on all my shares. I am net long the stock even with the short calls as I own more January $5 calls than short October calls. I bought the January calls for 50 cents and by selling the shorter term calls and collecting the dividend I am expecting to come out ahead over the January expiration. My goal in October is to lose the stock at $5 or roll calls out to November. If I lose the stock I am planning on selling January cash covered puts at $5 strike. The stock seems to be very undervalued with estimated book value of at least $7 on declining tanker values. Tanker values at some point should go up as they are down to the point that ship yards are losing money on amount of new builds vs overhead and are shutting down capacity and laying off workers. STNG when the tanker market turns should have a tail wind of increasing asset values or at least not declining while earnings increase. I was a little surprised at the stock action this morning but think that the pop in the stock that last week August 18 coincided with a seekingapha article. seekingalpha.com Tankers have been following oil prices somewhat and the drop in crude today of over 2% and a slug on new shareholders buying something they do not understand would be enough to pressure this name more than other shipping stocks IMO. Expecting a bounce above $5 so will resist my temptation to sell calls today and see where the price action brings to me in the next couple of days. During the time I was typing this the stock is getting close to $5 already. Jim

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