Airtime: Wed. Oct. 6 2010 | 2:10 PM ET
A safer and easier way to gain exposure to the rebound in oil is to use equity options, notes Chen Wai-Yee, head of derivatives, Asian desk at RBS Morgans Sydney. She tells CNBC’s Oriel Morrison why selling a put option in Woodside Petroleum is a good bet.
Strategies:
1. WPL: Oil price has broken above the US$80bbl, which is a positive indication for more upside momentum.
Long the oil sector via WPL. With dividend in the next few months, take advantage of the low share price by selling put options to earn income.
Sell Nov10 $44.66 put for $1.30 (5 Oct 2010 prices)
2. ANZ: Stock up on dividend for Christmas now
ANZ will be reporting and going ex dividend early November. Dividend is forecasted to be 65c and fully franked with franking credit* of 27.9c per share. (*Franking credit is valuable to Australian tax payers as 30% tax has been paid on it)
Buy ANZ shares and sell Dec10 $25 call for 25c
Upside is capped to $25.25 ($25 strike + 25c premium).Guaranteed entitlement to dividends.
Wai-Yee Chen 