FMG - Fortescue Ltd

[Gunnerguy]

Thanks for your thoughts Sharkman. Great comments !!!
I missed the '1', in the PM Yep $168 for $432 with a delta of .297.
This is what I have at the moment.

High	Low	PM	Loss	Delta
$22.50	$22.00	$168.00	-$332.00	0.297
$22.00	$21.50	$108.00	-$392.00	0.084
$21.50	$21.00	$125.00	-$432.00	0.057

The RR of 22.5/22 is nice 168/332, however as a beginner I am scared of the .297 delta and very close to current prices.
Using 21.5/21 is more attractive to me due to the delta of 0.057, with a RR of 125/432.

Thanks for the tip of strating higher in the bid and moving down. I have already been doing this but thanks for reminding me.
I'm trying to keep the deltas below 0.75, and only generally looking at low $ credits to start.

Gunnerguy
(Options learner, beware)

 

[basilio]

It's an interesting exercise gunner guy. Just wondering however if you havn't thought/researched the option of buying FMG shares for the next dividend payout and then selling them afterwards ?

It seems almost 100% ceratin that the next dividend will be $2 plus (could easily be $2.50) . It will also be fully franked.

I suggest the medium term outlook for FMG is still strong so there is a high likelihood the shares won't be heading south . Anyone else have a thought ?

How to play the fine art of 'dividend stripping' - The Rivkin Report

With reporting season finally out of the way, now's a good time to contemplate the opportunity for dividend stripping that comes around twice annually when companies reward shareholders with surplus cash during dividend season.

rivkin.com.au

 

[Value Collector]

It's an interesting exercise gunner guy. Just wondering however if you havn't thought/researched the option of buying FMG shares for the next dividend payout and then selling them afterwards ?

It seems almost 100% ceratin that the next dividend will be $2 plus (could easily be $2.50) . It will also be fully franked.

I suggest the medium term outlook for FMG is still strong so there is a high likelihood the shares won't be heading south . Anyone else have a thought ?

How to play the fine art of 'dividend stripping' - The Rivkin Report

With reporting season finally out of the way, now's a good time to contemplate the opportunity for dividend stripping that comes around twice annually when companies reward shareholders with surplus cash during dividend season.

rivkin.com.au

Only problem with that as a short term strategy on FMG is that I have noticed over the last couple of dividend cycles that FMG tends to fall by the full dividend+ franking credit after it goes EX.

FMG has seemed to have built up a following from a lot of impatient capital that is very flighty.

saying that I think there is money to be made in puts on FMG if it is part of a long term strategy, provided you have enough capital to cover margins through any times the herd gets spooked.

 

[Sean K]

I suggest the medium term outlook for FMG is still strong so there is a high likelihood the shares won't be heading south . Anyone else have a thought ?

Treasury forecast for IO is for $60 in the next year. FMG's sp should correlate. So, IO was at about $60-75 in 2019 and FMG was between 5 and 10 bucks.

 

[basilio]

Treasury forecast for IO is for $60 in the next year. FMG's sp should correlate. So, IO was at about $60-75 in 2019 and FMG was between 5 and 10 bucks.

I was talking about short term time span. Before and after the next dividend.
Longer term ? There has been discussion about where iron ore prices will sit next year and Treasury always has to take a conservative approach. But i would be amazed if it stayed at the current levels. In fact of course with the explosion of companies reopening mines one should expect the price to drop.

But Twiggy has screwed the cost price of his iron ore into the ground. FMG will continue to make a good return at lower prices.

 

[Gunnerguy]

It's an interesting exercise gunner guy. Just wondering however if you havn't thought/researched the option of buying FMG shares for the next dividend payout and then selling them afterwards ?

It seems almost 100% ceratin that the next dividend will be $2 plus (could easily be $2.50) . It will also be fully franked.

I suggest the medium term outlook for FMG is still strong so there is a high likelihood the shares won't be heading south . Anyone else have a thought ?

How to play the fine art of 'dividend stripping' - The Rivkin Report

With reporting season finally out of the way, now's a good time to contemplate the opportunity for dividend stripping that comes around twice annually when companies reward shareholders with surplus cash during dividend season.

rivkin.com.au

Basilio
I know about the current/future IO price discussions and the FMG dividend potential in August. I hold plenty of FMG in my 'Investment Portfolio', this particular trade is purely to gain premium income for my 'Options trading Portfolio'.
Thanks for the currents and information.

Gunnerguy.
('I'm gonna learn and do this options stuff')

 

[Sean K]

I was talking about short term time span.

Sorry, I thought you said medium term lifespan. Short term, it's still tied to the IO price I reckon, so if it's going up, it's going up.

 

[basilio]

Sorry, I thought you said medium term lifespan. Short term, it's still tied to the IO price I reckon, so if it's going up, it's going up.

My bad. Medium term is longer than 2-3 months.

 

[Value Collector]

Treasury forecast for IO is for $60 in the next year. FMG's sp should correlate. So, IO was at about $60-75 in 2019 and FMG was between 5 and 10 bucks.

That forecast is meant to be accurate, it's just a conservative number they enter into a box for budgeting purposes.

 

[Smurf1976]

FMG and its development of renewable energy projects.

They've taken some steps forward with this:

Fortescue signs contract with TasPorts progressing 250 MW green hydrogen plant in Bell Bay

Tasmania’s port authority has entered into an agreement with Fortescue Future Industries for land and operating access for its proposed 250 MW green hydrogen plant at Bell Bay, in Tasmania's north.

www.pv-magazine-australia.com

The Tasmanian Ports Corporation, commonly known as TasPorts, today announced it had signed an Option Agreement with Fortescue Future Industries for its export-scale green hydrogen plant planned for Bell Bay in northern Tasmania.

Of potential relevance to any hydrogen producer at Bell Bay is that 100% of natural gas supplied into Tasmania comes in via a pipeline route that's approximately just at the top of the image in the link running from left to right. Can't see it but it's in the ground, that's where it is. That would make it a very easy place to blend a portion of hydrogen into the natural gas supply if someone wanted to do that.

Also possible that the TEMCO smelter, which is immediately to the left of the image shown, and Bell Bay Aluminium (top left) might be interested in it as a heat source for sintering and anode baking respectively if the price was right so another possible local market in addition to exports.

Any use other than export is however pure speculation on my part, just noting that it's a possibility if the economics stacked up and relevant companies were interested.

 

[Value Collector]

That forecast is meant to be accurate, it's just a conservative number they enter into a box for budgeting purposes.

I meant to say, "not meant to be accurate"

 

[Sean K]

I meant to say, "not meant to be accurate"

I wouldn't be surprised if they're throwing darts blindfolded for their numbers.

 

[Value Collector]

I wouldn't be surprised if they're throwing darts blindfolded for their numbers.

I think everyone is, no body knows the exact long term price, it’s like the weather, we have a basic idea of what the climate will be within a range based on based the invisible hand of supply and demand, but as for the daily, weekly or monthly weather in the markets, it’s unknown.

 

[Go Figure]

Fortescue Future Industries (FFI), the 100 per cent renewable green energy and industry initiative of Fortescue Metals Group Ltd (Fortescue, ASX: FMG), announces it has reached its 30 June 2021 targets for initial decarbonisation projects, announced on 15 March 2021.

FFI’s specialist teams have made ground-breaking progress including:

• Successful combustion of ammonia in a locomotive fuel, with a pathway to achieve completely renewable green fuel
• Completion of design and construction of a combustion testing device for large marine (ship) engines, with pilot test work underway and a pathway to achieve completely renewable green shipping fuel
• Finalised design of a next generation ore carrier (ship) that will consume renewable green ammonia, with the Classification Society giving in principle design approval
• Testing of battery cells to be used on Fortescue haul trucks
• Design and construction of a hydrogen powered haul truck for technology demonstration
complete, with systems testing underway
• Design and construction of a hydrogen powered drill rig for technology demonstration complete, with systems testing underway
• Successful production of high purity (>97%) green iron from Fortescue ores at low temperature in a continuous flow process
• Successful initial trialling to use waste from the green iron process noted above, with other easily sourced materials, to make green cement.

 

[basilio]

Fortescue Future Industries (FFI), the 100 per cent renewable green energy and industry initiative of Fortescue Metals Group Ltd (Fortescue, ASX: FMG), announces it has reached its 30 June 2021 targets for initial decarbonisation projects, announced on 15 March 2021.

FFI’s specialist teams have made ground-breaking progress including:

• Successful combustion of ammonia in a locomotive fuel, with a pathway to achieve completely renewable green fuel
• Completion of design and construction of a combustion testing device for large marine (ship) engines, with pilot test work underway and a pathway to achieve completely renewable green shipping fuel
• Finalised design of a next generation ore carrier (ship) that will consume renewable green ammonia, with the Classification Society giving in principle design approval
• Testing of battery cells to be used on Fortescue haul trucks
• Design and construction of a hydrogen powered haul truck for technology demonstration
complete, with systems testing underway
• Design and construction of a hydrogen powered drill rig for technology demonstration complete, with systems testing underway
• Successful production of high purity (>97%) green iron from Fortescue ores at low temperature in a continuous flow process
• Successful initial trialling to use waste from the green iron process noted above, with other easily sourced materials, to make green cement.

Have to say I'm amazed and delighted at the progress that FMG has made on these areas in seemingly a scant few months.

In reality I don't believe it has only been a few months work. I'd be confident that their teams have been on the job for a fair bit longer but it certainly looks good to set a seemingly very ambitious target March 21 and announce it's achievement a bare 3 months later.

So perhaps this is a real life lesson on what can be achieved in terms of decarbonisation with decisive leadership, strong engineering talent, a decent budget and an economic incentive. Obviously the trials, designs and tests need to be built and proven and that time span will be longer than just a few months. Nonetheless I think this is very encouraging on a number of fronts.

06/07/2021
9:58 am

FFI Delivers on Ambitious Stretch Targets

 

[over9k]

I made a post a while back about him looking into another company and also trying to copy adani green. I'll see if I can dig it up.

 

[Go Figure]

FMG SP from a solid base is now on an upward trajectory, some key factors include,

June Quarter results due 30/7/21 likely to meet the top end of shipment forecasts.
IO price has averaged over $170 in 2021.
Super profits to be reported at 30 August for YE2021.
A franked dividend of potentially over $2.00 is possible.
Demand remains high for Australian Ore and prices remain at exceptionally profitable levels going into FY 2021/2022.
The Iron Bridge is set to commence production of high quality ore in the latter part of 2022, giving FMG customers product variety.
FFI activity and innovation as yet not measurable and or priced in.

Interesting times and important decisions ahead for both board and shareholders.

 

[sptrawler]

I'm starting to get a FOMO feeling.

 

[qldfrog]

I'm starting to get a FOMO feeling.

Same too so definitively time to be very cautious and scared

 

[striek]

I bought 50 call options a week ago for September between 23-26.50. It's run up has been generous the last couple days.

It's future is heavily linked to iron ore prices but I don't think that means its overvalued. I said it in another thread earlier this year but these iron ore companies are priced as if the iron ore price is going to head downhill rapidly in the near future so the risk is very measured.

This time last year FMG paid a dividend yield of 5.3% of the share price before ex-div August 28 2020. Earlier in the year they paid a 6.1% half year dividend based on the sp on 26 Feb.

FMG is widely projected to pay a final dividend between $2-2.50 (and should be on the higher side IMO). That represents 7.9% to 9.9% yield on the current share price of $25.23. Figures before franking credits of course.

Timing for options is tricky and I hope it continues this trend, but long term I think there are a few resource stocks that are heavily undervalued on fundamentals. FMG in particular I think has negative value and sentiment attached for FFI and Iron Bridge due to capital concerns of the former and multiple delays of the latter. Iron Bridge even at long term iron ore prices should offer spectacular returns.

All IMO.