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2020 market expectations and positioning

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Old 08-02-2020, 07:58 PM   #706
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In the early 80s Exxon got into some pretty crazy businesses for an oil company, including microprocessors and even small business computers. They owned Zilog for example, a semiconductor company that eclipsed Intel during the 8-bit microprocessor era.

I cannot think of a major oil company that has successfully pivoted yet. I hope Shell and others can do it, but I’m skeptical.
lol If only Exxon had bought some other semiconductor companies like ADI or TI, I wonder how would they be now.

Of course this is with the benefit of hindsight.
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Old 08-02-2020, 09:24 PM   #707
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I have short put positions on RDS AMS expiring end of the year. I bought in into the trade deal and reflation story, when it was at 26, now at 23 odd. Kind of back fired but we will see where it ends the year. I also have similar XLE puts and puts on ING bank. XLE also significantly under water, I entered it when XLE was at 60.

This is a small trade - you are talking about 5200(eur?) position if you take over the stock? It doesn’t seem like you can get a good edge for this trade though because a lot things can happen over 1 year period and statistically the variance will be higher as the time length is longer. Anyway is the contract liquid? The European option market doesn’t look very liquid the last time I checked and the spread is very high.
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Old 08-02-2020, 09:38 PM   #708
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This is a small trade - you are talking about 5200(eur?) position if you take over the stock? It doesn’t seem like you can get a good edge for this trade though because a lot things can happen over 1 year period and statistically the variance will be higher as the time length is longer. Anyway is the contract liquid? The European option market doesn’t look very liquid the last time I checked and the spread is very high.
This is fully cash secured and the plan is to hold until maturity, so liquidity doesnt matter, I am not going to be forced to buy it back. Whatever happens, worstcase scenario, I will buy the stock at the strike price at the end of the year.
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Old 08-02-2020, 09:47 PM   #709
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if you are short RDS, wouldn't you be making profit since RDS price dropped quite a bit since you opened the position on 20 Jan?? I not into options so I wouldn't know how to read the pic u posted.

I am feeling that this is a very good time to stock up on Shell.
I am short on 26 strike 2 put contracts of shell expiring in Dec this year. This means, I sold the contract to someone and I am agreeing to buy 2X100 shares of shell at the price of 26 Euros by the end of this year, if the price of shell stays below 26. In return to this obligation I got paid premium of 2X100X2.2 = 440 Euros upfront, which is about 8.4%.

Shell has high dividend payout so when dividend is paid out, the stock price falls proportional to the dividend, so huge part of the premium is actually the dividend yield, that I have got.

Now the price of shell has fallen so much that if I would have gotten into this contract now, I would have received a premium of 2X100X4.12 = 824 Euros. So right now it is technically a mark to market loss of 824-440= 384 Euros.

Last edited by revhappy; 08-02-2020 at 10:05 PM..
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Old 08-02-2020, 11:33 PM   #710
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Good question. But look at price action, has a lower dividend already been priced in?

The long-term question to ask is which of the oil majors will succeed in transforming into an 'energy' company and not just an oil company that dabbles in other forms of energy. I think that Shell is actually going to be one of the leaders. This is one of my buy and hold forever dividend stocks

The US oil majors probably flush with cash due to Shale oil so they may be more complacent, not as willing to change.
Which exchange do you buy shell from? Is it NYSE? I am thinking to buy shell on NYSE but wondering if 30% WHT would apply. Someone told me since RDS.B on NYSE is depositary receipt, hence 30% WHT won't apply.
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Old 08-02-2020, 11:52 PM   #711
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Which exchange do you buy shell from? Is it NYSE? I am thinking to buy shell on NYSE but wondering if 30% WHT would apply. Someone told me since RDS.B on NYSE is depositary receipt, hence 30% WHT won't apply.
I buy Shell B ADR on NYSE
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Old 08-02-2020, 11:54 PM   #712
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Which exchange do you buy shell from? Is it NYSE? I am thinking to buy shell on NYSE but wondering if 30% WHT would apply. Someone told me since RDS.B on NYSE is depositary receipt, hence 30% WHT won't apply.
ADR follows the wht of the source country. In this case NL whatever wht they have will be used.
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Old 09-02-2020, 09:16 AM   #713
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Which exchange do you buy shell from? Is it NYSE? I am thinking to buy shell on NYSE but wondering if 30% WHT would apply. Someone told me since RDS.B on NYSE is depositary receipt, hence 30% WHT won't apply.
I'll repeat: unless you're a U.S. person, ADRs are not subject to any U.S. taxes of any kind.

ADR follows the wht of the source country. In this case NL whatever wht they have will be used.
Or a lower treaty rate, handled by the ADR manager (internal to the ADR), and in this case (Shell and the U.S.-Netherlands tax treaty) that could be exactly what's going on. In some cases you may need to be a U.S. person holding the ADR to benefit from a lower tax treaty rate, if applicable, but it won't be a higher rate.

I do not generally recommend individual stock (or ADR) investing.

Last edited by BBCWatcher; 09-02-2020 at 09:19 AM..
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Old 09-02-2020, 12:48 PM   #714
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Shell is also listed on LSE... I buy the ADR that holds LSE listed Shell B shares because no WHT for SG investors.

For options there are probably different considerations but for long-term dividend investors, obviously LSE listed Shell B should be your starting point

Just like BHP. I'm vested in ADRs holding the LSE-listed BHP, not the Australia-listed BHP.
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Old 10-02-2020, 09:09 AM   #715
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STI deep red
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Old 10-02-2020, 09:22 AM   #716
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ES3 is ex dividend today.
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Old 10-02-2020, 09:37 AM   #717
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Yes you are right

ES3 is ex dividend today.
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Old 10-02-2020, 09:49 AM   #718
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Is that why ES3 dropped more than STI?

ES3 is ex dividend today.
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Old 10-02-2020, 09:55 AM   #719
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Is that why ES3 dropped more than STI?
Yes. Payout 24th Feb.
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Old 10-02-2020, 10:27 AM   #720
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STI deep red
Wake me up when STI is 2500
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