We continue to see wild swings in the market that seem to negatively impact stocks across the board.
One stock that is holding up well is liquefied natural gas supplier Cheniere Energy (LNG). The stock is somewhat speculative but the company is not and can be traded to generate 40% plus annualized cash returns in a year.
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Cheniere ( ) is the only licensed liquified natural gas exporter in the U.S. and this situation will not change for many years due to the licensing and construct obstacles facing any potential competitors. The company buys cheap natural gas in the U.S. (and it will be cheap for a generation or two due to fracking) and sells it gas short in Europe and Asia. Business is great and their export facility, the Sabine Pass, still has more capacity coming on line in 2018.
This past Monday we sold the LNG Weekly 51.50 Put option for $0.50 or $150 for our 3 contract trade expiring in 4 days.
The stock ran up during the week, so on Thursday we took profits early and cashed out of the trade for $0.45 or $135 of profit. Nothing wrong with taking profits “early” in this turbulent market.
That’s almost a 1% return in 3 days … do that 50 times a year and you have a 50% return on capital from this one stock. I’m looking for more trading opportunities to collect weekly cash selling options into the natural gas and energy sector.
About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.
He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com, and he is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.
His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, meaning his trades produce the expected income 98% of the time. No one’s perfect.