Buy Alert: April 10, 2015

Buy Alert: April 10, 2015

 

Option Strategy:

Buy Marathon Oil $MRO July 17, 2015 $30.00 calls for $1.30 or better.

 

Commodity Outlook: Crude Oil

Despite the enormous EIA oil inventory build reported on Wednesday, the price of WTI is holding above $50 a barrel.  In fact, the commodity is up $0.50 a barrel to $51.39 as I write this morning.

This resilient price action in the face of huge short-term oversupply issues furthers the idea that crude has already hit the lows of the year.

While I don’t expect a rally above $60 anytime soon, a number of oil explorers are pushing to multi-week highs in recent trading.  Investors are bidding them up with the idea of getting in before the real crude rally hits in coming months.

If crude merely holds above $50, we may see additional gains out of companies like the one you’ll find below…

 

Resource Company: Marathon Oil $MRO

This international oil and gas explorer has been on a roll in recent trading.

$MRO shares are up 8% in the past week.  Given investors’ strong appetite for this stock, the odds are in our favor for even higher prices in coming weeks.

So here’s what we’ll do…

Buy the $MRO July 17, 2015 $30.00 calls for $1.30 or better.

The current bid/ask spread for this contract is $1.17/$1.20.

Do not pay more than $1.30!

Our official entry price for performance tracking is $1.20.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $MRO to trade higher.  Our first profit target is $30.50 while our second target is at $31.50.

Our risk control line for this trade is at $27.80.  If $MRO trades below that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading