Buy Alert: April 29, 2014

| April 29, 2014

Buy Alert:  April 29, 2014


Option Strategy:

Buy PetroQuest Energy (PQ) July 18, 2014 $6.00 Calls for $0.70 or better.


Commodity Outlook: Oil

Oil stocks are back on the rise again today…

And as you know, performance in this industry has been outstanding over the past month.  Investors just can’t seem to get enough oil and gas producers for their portfolios.

It’s a trend I see continuing for the foreseeable future…

As long as the broad markets don’t break down, oil and gas stocks will likely continue their strong outperformance. 

Here’s another way to capitalize on this smoking hot industry!


Resource Company: PetroQuest Energy (PQ)

PQ is a Layfayette, Louisiana based oil and gas producer.  The company has exposure to the Texas Gulf Coast, Mississippi Lime and Woodford Shale of Oklahoma, and Cotton Valley of East Texas.

PQ’s Gulf Coast assets are producing free cash flow, which the company is using to fund growth in its onshore assets.

Speaking of growth…

The company is expecting to drill 72 gross wells in 2014, which should increase oil and NGL production to 6,625 barrels per day.  That’s up 64% from the 2013 exit rate.

No doubt about it, PQ is set to grow quickly this year!

So here’s what we’ll do…

Let’s buy the PQ July 18, 2014 $6.00 Calls for $0.70 or better. 

The current bid/ask spread for this contract is $0.30/$0.60. 

Pay no more than $0.70 per contract!

Our official entry price for performance tracking is $0.60.  Your price may be higher or lower.


Exit Strategy:

PetroQuest Energy

Remember, we want PQ to trade higher.  Our first profit target is the $7.00 technical resistance area.  We could see additional upside for PQ if investors’ appetite for the oil and gas industry remains strong.  In such a scenario, PQ may jump to our second profit target of $8.00.

The risk control price is $5.20.  If PQ falls below that level, conservative investors should consider closing this trade to conserve capital.


Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.