What a day! It was up, then down, then back up, then back down. My head was spinning by the closing bell! What did I do? What did I buy? I watched for most of the morning, but ultimately decided to stay away from most trades. I did buy Twitter and double down on my Starbucks call’s. That was it. Below are my current holdings with a little update for each.
Currently, this is my largest holding. I believe a couple of things will happen over the next six (6) months: crude oil is going higher and Denbury will go higher with it. Denbury has always traded with crude and that hasn’t changed.
Today I broke even twice, but it just couldn’t push past the $2.78 per share price. I was really hoping for $2.82 and had a pending limit order to sell 6,500 shares @ $2.82. I knew it would probably go back down before the close and I was right. Unfortunately, it never got to my sale price – bummer.
Here are my Denbury holdings as of right now:
- Actual stock shares: 26,500 @ $2.78 cost basis
- Sold 10 contracts NOV 3.5 PUT’s @ $0.60 per contract making my break even $2.90 if exercised the third week of November. I’m wiling to take the shares and I’m not too concerned about this. It will raise my cost basis on my actual shares, but no big deal. If it goes profitable I’ll probably buy them back to close.
- Sold 25 contracts NOV 4 PUT’s @ $1.024 per contract making my break even $2.976 if exercised the third week of November. I’m willing to take the shares and I’m not too concerned about this. It will also raise my cost basis on my actual shares, but no big deal. If it goes profitable I’ll probably buy them back to close.
If you will notice I have 3500 shares as the seller (writer) of PUT contracts for November. This is why I currently own 26,500 shares. I am anticipating being PUT the 3500 shares the third Friday of November making my total share count 30,000. I am also expecting a good earnings report next Thursday and I am holding everything through earnings – risky, but could be wildly profitable.
If you have read my blog you know that the primary reason I am down this year is because of Starbucks. Does this mean I never come back and try again? Hell no. The May / June Starbucks debacle was not the fault of Starbucks. Let’s be honest, it was my stupidity. Never, ever, ever, buy a short expiration call option on a stock that just reported earnings and started heading down. I mean how stupid can you be right? I lost a ton of cash thinking Starbucks would jump right back (as it always had) and boy was I wrong.
Currently, I own twenty (20) contracts of the JAN 50 CALL. Yeah, look at that. First, it’s a January call so I have three (3) more months before it expires. Second, it’s a $50.00 strike call so it’s DITM (Deep-In-The-Money) and my break even is $54.38 per share. Do I believe Starbucks will be higher by a dollar in three (3) months? Yes I do. Winter is coming. Christmas is coming and everybody loves Coffee! Totally different trade than in May / June.
I was actually up several hundred dollars at lunch today, but did not sell it. I intend on keeping for at least a week. They report earnings next Thursday as well and I do not believe I’m going to hold through earnings. Just too damn risky given the state of the restaurant industry right now. I’ll probably seriously regret dumping it.
You can read my previous Twitter post earlier today, but I went ahead and picked up 1000 shares @ $17.75. If it doesn’t act right tomorrow (Friday) I’m dumping it (loss or not) and waiting to see if it dips to $15.00 and picking it back up. I have a feeling tomorrow morning will be very important with regard to which direction it wants to move.
THE BOTTOM LINE
Most of my trading portfolio is in one basket. I realize that. However, I’ve been watching Denbury Resources for more than a year now and I believe the bottom has been hit with the oil & gas industry and I am not alone in that belief. I believe if a company is paying off debt while oil is in the mid-40’s it is doing ok. I also believe if they didn’t go bankrupt in February, they’re going to be ok. Buy DNR and in a year or two you’ll be glad you did.