It’s still all about Oil. Oil is good at stealing the spotlight, and this whole week is dedicated to oil thanks to an upcoming meeting between basically OPEC+G20. All this has helped me consider a new trade. Since I’m buying and holding UNG a lot; also buying USO more recently. Why not sell some calls against this to scrape a little profit if the price falls or dances around in a range. Most certainly it limits my gains, but I do that to myself anyway.
About those covered calls, I’m thinking there are a number of equities that could be worth writing calls against as well. I’m liking SLB. Priced near $15, and $15 strike calls are selling for roughly $1.5 against May 15 expiration. That is near 10% premium, plus if there is a surprise jump in SLB from the OPEC+G20 (that’s what I’m calling it now), I stand to cover the whole thing above $150 profit. I’m not going to get excited about it, but it seems like a good trade right now. I could also sell contracts closer to expiration if I think the price may wait to jump. I limit my gains if the underlying price jumps, so not sure I want to go that route.
I’m still holding 55% of funds in UNG with an average of $13.41. If I counted my USO gains, I could apply this to my UNG average and maybe bring it down 10 more cents. I’m not sure. I’m saying this now because I must get to work. I am planning to hold my position and see what happens this week. I know one thing, if the dance continues, I’m ready to start selling calls against the shares. I’m not sure why I didn’t do this before, probably because I’m still fairly green to options. Holding for now. NG fundamentals are still holding with only slight changes in Supply/Demand. It’s more about what happens with oil this week (sadly).