I have lost some faith in Chevron (CVX).
music selection: “My Lover’s Box” — Garbage
I did a deeper dive into the numbers for CVX cash flow and grew increasingly concerned they are not doing enough ensure the dividend can continuing growing throughout this weak pricing cycle. Capex costs are just too [dang] high. A company should never trade free cash flow for market share and that appears to be the game they are playing at CVX.
As a result, I am going to be more aggressive in trying to exit with covered calls. I also need to raise cash to support written puts on safer and better paying options. Today’s transaction was to close CVX151120C00095000 at a loss and open CVX151120C00090000 for a net credit of 1.70. I now exit the position at the 90 strike instead of the 95 strike is market conditions are right on 20NOV2015. That will lock in a short term capital loss of 4 dollars a share. The loss will be offset by 4.81 in total premiums earned since inception of the trade, allowing the Lizard King to eek out a puny profit. If shares are below the strike at expiry, I will continue to write at 90 (or maybe even lower!) to try to exit a position I deem to be increasingly risky.
Devour your prey raptors!