California rainfall and snowpack has been well above average over the past few months. The last time I saw San Diego this green was 2017 but the green died and a hot summer led to massive wildfires throughout the state. I’m thinking we see a similar trend towards the end of this year. That said, would shorting a utility or put options be the play? Any other ideas to play what could be another massive wildfire season?

3 ...

Report Post

Posted by Bestbank Tiger

Premium Member

Member since Jan 2005

79362 posts

Posted on 1/19/23 at 12:26 pm to jlu03

Avoid shorting. The potential losses are unlimited.

Could go for puts if you think the price will drop. You wouldn't be risking anything beyond what you paid for the puts. But even then you're trying to time the market.

Best best is to buy a stock that would benefit from PG&E taking a dive. Then if you get "stuck" with it ypu still have an asset that can win for you another way.

1 ...

Report Post

Posted by Texas Tea 123

Member since Sep 2017

287 posts

Posted on 1/19/23 at 1:23 pm to Bestbank Tiger

You can short a utility.. we're not talking about Tesla here where a cult following can push it up 3x. Shorting is much wiser than lighting money on fire via options. Neither are advised for general retail.

0 ...

Report Post

Posted by baldona

Florida

Member since Feb 2016

23429 posts

Posted on 1/19/23 at 2:35 pm to jlu03

I don't know about the stock play, but you honestly think a wet winter means it'll probably be a dry summer? Why is that outside of it happened one time?

Is a dry winter usually mean a wet summer?

1 ...

Report Post

Posted by jlu03

San Diego

Member since Jul 2012

3354 posts

Posted on 1/19/23 at 7:16 pm to baldona

quote:
I don't know about the stock play, but you honestly think a wet winter means it'll probably be a dry summer? Why is that outside of it happened one time?

The majority of the year is a desert climate. Rain events like what is occurring now is rare.

1 ...

Report Post

Posted by baldona

Florida

Member since Feb 2016

23429 posts

Posted on 1/20/23 at 7:15 am to jlu03

So are you saying the extra growth from the rain creates increases vegetation that eventually turns into fuel for the fire? That makes some sense.

2 ...

Report Post

Posted by Triple Bogey

19th Green

Member since May 2017

6572 posts

Posted on 1/20/23 at 8:23 am to baldona

quote:
So are you saying the extra growth from the rain creates increases vegetation that eventually turns into fuel for the fire? That makes some sense.

I actually like this idea a lot. But utilities are gonna be hard to bring down with rates/inflation being high though. Utilities, industrials, and energy all have been pretty resilient.

Having said that, I like the short idea/put options more since they don’t pay a dividend

This post was edited on 1/20/23 at 8:24 am

0 ...

Report Post

Posted by wutangfinancial

Treasure Valley

Member since Sep 2015

11869 posts

Posted on 1/20/23 at 9:46 am to jlu03

You should sell calls. It's a Utility, not a highly leveraged SaaS company. That's a different crowd of investors. Also, I'm assuming the market for PGE options is not deep enough to make this trade worth executing on a risk adjusted basis.

Institutional Holdings

0 ...

Report Post

Posted by TDFreak

Coast to Coast - L.A. to Chicago

Member since Dec 2009

8998 posts

Posted on 1/20/23 at 8:00 pm to baldona

quote:
So are you saying the extra growth from the rain creates increases vegetation that eventually turns into fuel for the fire?

Bingo. Californian relatives are telling me the same potential scenario.

Now, you know the utilities work like hell to clear brush to prevent that from happening.

I’m long PCG and currently up around 65%. The chart has been awesome.

Still good luck to you. I will raise my stops to preserve some return. If the stock shows weakness, I exit.

Page 1