Is now a good time to buy oil stock?

[craigmatic]

With the price of oil low and several companies paying 4-7% dividends. Isn't now the best time to buy oil stock and hld on to it long term?

[elleng]

1. According to the old rule,

buy 'low' and sell high. How are prices of the stocks? Gas at the pump has increased significantly in recent weeks.

[progree]

3. Here's 3 of them

Exxon Mobil http://www.morningstar.com/stocks/XNYS/XOM/quote.html
Chevron http://www.morningstar.com/stocks/XNYS/CVX/quote.html
BP http://www.morningstar.com/stocks/XNYS/BP/quote.html

Dividend yields:
XOM 3.4% CVX: 4.34% BP: 7.73%

[craigmatic]

7. What's your opinion on shell oil?

[progree]

10. Nice dividend yield, 7.24% :-)

http://www.morningstar.com/stocks/XNYS/RDS.A/quote.html

Actually I don't have an opinion on any individual stocks. I'm a fund investor, and mostly index funds at that.

[craigmatic]

4. Shell oil is like 52 dividend is like 7%. Chevron is 98 dividend is like 4.4%

[progree]

2. I think there is the long-term headwind of climate change - divestiture and the indisputable

fact that we have to leave a lot of the earth's fossil fuel reserves in the ground if we are to have any chance of keeping global warming below catastrophic levels. Thus stranding a big chuck of assets (do current valuations reflect this reality?).

Seems like about every month I read of another pension fund or sovereign wealth fund or university divesting from all fossil fuel companies.

On dividend yields, I looked at only three: XOM (Exxon Mobil) 3.4%, CVX (Chevron) 4.34%, and BP 7.73%. Hmmm

That said, I was a big energy enthusiast and luckily happened to buy a lot of Vanguard VGENX in 2009 near the bottom of both the financial and oil market -- rode it way up and, yes, rode it back down.

http://www.morningstar.com/funds/XNAS/VGENX/quote.html

I'm looking to shift to a good alternative energy mutual fund or ETF that doesn't have obscene expense ratios.

[craigmatic]

6. yes the climate change argument is persuasive. Ideally I'd like to get into Tesla or technology but

those stocks are out of my price ceiling. I'm a conservative investor and a huge fan of dividends.

[Hoppy]

5. Buy 100 BP and sell a covered call, Jan. 2017. Then, buy a $25 put, Jan, 2017

.

Your 7% yield will turn to about 20%.

The caveat is that there is a powerful amount of money betting that the stock will go even lower.

[craigmatic]

8. You sound really good at this.

That's too rich for my blood I'm just dipping my toe in the waters right now so to speak. I got my eye of this shell stock and I was hoping it would drop today but it didn't stay down for long. I'm betting we see gas go back up to the 2.10's sometime in the next 2-3 years.

[Hoppy]

9. The strategy I described, works best in stocks that trade weekly options and are high volatility.

Example: Goldman Sachs.... Trading now at $159.00

You can buy the May 27th, $155 put at $4.00. x 100 = $400.

You can then sell the $160.00 call, week after week for about $2.00 each week. You can do that until May 27th. when you start all over. Potential profit, approx. $1,000 for the cycle.


If the stock goes below $155. on May 27, you still win.


This is a simplistic overview of the strategy, but study it with Facebook, Apple and so forth.