Bought 2 NEE Calls on a Split announcement

Yesterday Nextera Energy (NEE) announced a 4:1 split. After the Apple and Tesla splits I predicted we will see more companies doing the same. Well, this is the first!

Nextera is a large cap energy company, $138 billion.

NextEra Energy is a holding company. The Company is an electric power company in North America and, through its subsidiary NextEra Energy Resources, LLC (NEER) and its affiliated entities, is the generator of renewable energy from the wind and sun.

The company’s P/E is a little high at 30, when the average in its industry is 23. That means that the market expects NextEra Energy will outperform other companies in its industry. The company also pays a nice quarterly dividend of $1.40.

I, in no way, feel this split will act like the Apple and Tesla splits. However, Nextera is a very good stock selling at $296, and I think I can make a little money on the split. I’m not going in like I did with Apple and Tesla, I only bought 2 contracts of the Jan 15, 2021 $300 Calls. I plan on holding these Calls through the split, and probably sell the day of the split, which is Oct 27th. As I look at my split strategy, if the stock pulls back between now and the split, I might buy 1 or 2 more contracts.

Buy to Open 2 NEE 1/15/21 $300.00 C @ $17.90 (Delta .49)

As I write the stock is up $2 from where I bought these options. Again, I don’t think this split will be like the Apple and Tesla splits. Today’s volume on NEE’s stock is 1.2 million shares where AAPL’s is 66 million. This stock does not draw the attention of the big boys.

Lets watch closely and see how this split works out. And watch for more split announcements. I feel they will be coming.

Success trading,

Steve

The Options Coach