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  • AvatarScott Pearcy
    Participant
    Post count: 348

    A few weeks back I bought long calls on SO (I work for Southern Co) when the stock was in the midst of an extended downward streak…..Today I sold those long calls for a 100+% gain…..As the construction project gets closer to being completed, I may be purchasing long calls on SO again……

    Sean, what are your thoughts on purchasing calls in the energy sector as the overall market trends down….?

    Sean HymanSean Hyman
    Keymaster
    Post count: 3910

    Congrats on your gains.

    It’s present P/E isn’t exactly cheap but my two bigger concerns are its massive debt load relative to its size and the price being right up against a declining 50-week moving average now.

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    AvatarScott Pearcy
    Participant
    Post count: 348

    Yeah….it has been a steady climber for a while and the debt they have incurred is because of the construction of the two new nuclear power plants….The stock took a big hit in the early part of this year because of Covid (Nobody was using power in manufacturing!) and Southern had to make financial promises to the other stake-holders to guarantee completion of the project…..Once the construction project is complete and the new units come online supplying power, the stock should rebound nicely…..I purchase company stock through the Employee Stock Purchase Plan every time I get paid and when I have a sizeable amount of stock ($30K) I sell $20k and equally distribute amongst my self directed brokerage account (Logical Investor Portfolio) and a date targeted aggressive company managed fund…..

    Sean HymanSean Hyman
    Keymaster
    Post count: 3910

    Lots of other technical risks showing up on its long-term chart too. One huge red flag is the huge shoot-up that it had (green line emphasizing it). That tends to be indicative of the last part of an uptrend, too positive of sentiment and a blow-off rally that leads to a much larger decline overall. If that’s the case, it could unfold like this.

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