Trade Alert: Birdie Call Options
Don’t forget this week’s Live Q&A Chat at 2pm EST. I’ve got an update and want your advice on the new TradingWithCody.com site and (soon thereafter) a TradingWithCody app, so come join us at http://tradingwithcody.com/chat today so I can get your input.
Stocks getting crushed again today, oil and energy leading the way down. I’m still not ready to start scaling into any energy stocks, but am getting closer as fear in the energy sector is starting to give way to panic. With oil breaking down to new 5-year lows, there are lots of companies out there entire business models just turned from positive cash flow to negative and whose entire business have to be rationalized. The time to buy just might be when we start to see some bankruptcies hitting the energy sector. First large cap company to go bankrupt in energy might then be the right time to start scaling into some of the best run large cap energy companies with stellar balance sheets and assets. I am still early on in doing homework on these opportunities that look to be developing in the energy sector, but still plan on doing more for the next few weeks. Stay tuned.
Meanwhile, I want to add a tranche to my still small-ish Twitter position. I’m buying some longer-dated call options out into March of next year with strike prices from $43-46 or so. As usual, you risk losing all your capital when you buy call options that have a set-date of expiration vs just buying the common stock itself. If you’re not an options trader or just want to continue scaling into a long-term Revolution Investing position in Twitter, then I’d look at just scaling into another batch of TWTR common stock here. Best case scenario for me with this batch of TWTR call options I’m buying is that they are far in the money when they expire and that I’ve trimmed them down and taken profits on part of them and I take delivery on the common stock on the rest of them when it expires. Then again, if TWTR’s at $42 in March, I might have lost all my capital from this batch of call options. There’s the risk/reward, do what you think is best for you, including if that means not adding to your Twitter at all today.
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