Don Dion, "Protect Your Dividends From a BP-Like Move,"
June 16, 3:39 p.m. EDT
"You never want to be stuck with significant exposure to a company that suddenly cuts its dividend. I'm sure we'll be hearing about a lot of BP shareholders with this problem in the days ahead. Mitigate the risk with an ETF like DVY. The top five holdings in DVY are currently
At the time of publication, Dion Money Management was long DVY.
Tim Collins, "BP dividends,"
June 16, 3:01 p.m. EDT
"Perhaps BP can use coins for the dividend and stuff the leak with them? Each piece of news has spiked the shares today, although I think it is mostly short covering. Bankruptcy is clearly off the table short term, but a dividend cut does not stop the leak. If it is, indeed, 60,000 barrels a day, or even more, I think the tab could be closer to $100 billion when you factor legal, fines, clean up and the fact that there is no guarantee a relief well will work. If this is, indeed, the greatest oil find ever, then not stopping the leak will be more than just a BP killer. It will be a Gulf killer."
At the time of original publication, Collins was "Still short, but hedged off with some call spreads."
Tim Collins, "The Big Q for BP holders,"
June 16, 2:44 p.m. EDT
"If you rely on that dividend, what do you do now? Obviously, your principle is probably way down, but now you have 3 quarters with no income. Do you take the loss and try to find something else? Do you sell enough shares to equal the dividend of those 3 quarters? Do you now sell covered calls to try to replace that dividend? Lastly, what happens if you don't sell, and it is not restored?"
At the time of original publication, Collins was "short BP via puts."
Mark Casa, "BP Bonds in retail inventory,"
June 16, 2:11 p.m. EDT
"Just checked with man AJ and size lots of BP bonds are in inventory for retail distribution at major brokerage houses, with 2-3yr offerings in the 8.0-8.5% YTM range...hhmmmm"
At the time of original publication, Casa was "long BP 3yr notes."
Tim Collins, "BP's $20 Billion Drop in the Bucket,"
June 16, 1:37 p.m. EDT
"The market madness has no end. Apparently, tossing $20 billion into a pot that you'll never see again is a bullish action. At least that is how BP stock reacted. The fact that we keep seeing estimates increase for this leak -- some even contend it may be 100,000 barrels a day or more -- I don't see how anyone wants to play the common. However, judging by the 125 million shares traded, plenty of people still do."
At the time of original publication, Collins was "Short BP, net delta short SPY".
James "Rev Shark" DePorre, "BP Helps to Lift Oil and Market,"
June 16, 12:52 p.m. EDT
" News that BP has agreed to place around $20 billion in an escrow account to pay Gulf spill claims is helping the oil sector pop, which is taking the market to highs for the day.
"This follow-through of a technically weak break above resistance is exactly the sort of thing that has prevailed since the March, 2009, low. The indexes aren't the only example of this sort of action. Consider
. Since the gap up on its earnings report in April, there has been clear net distribution, which simply means volume has tended to be heavier on down days. Despite the net selling, the stock it isn't far from all-time highs above $270. Nothing in that chart made it a very compelling buy, especially during these past few days when the gains came on much lower-than-average volume. Yet it is producing some good gains for buyers.
"That sort of chart action has made technical trading extremely challenging lately. If you focus too much on volume, you are sure to be misled. But it is hard to dismiss the idea that stocks that go up on strong volume should do better than those that go up on weak volume. The logic of that is sound. But what good is logic if it doesn't make money?"
At the time of original publication, DePorre had no positions in the stocks mentioned.
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This article was written by a staff member of RealMoney.com.