Buy Alert: February 13, 2015

Buy Alert: February 13, 2015

 

Option Strategy:

Buy Penn Virginia (PVA) March 20, 2015 $8.00 calls for $0.70 or better.

 

Commodity Outlook: Oil

WTI is making another bullish run at the $54 area this morning. If the commodity can surpass this level, it will be a very positive signal for the market.

While I still have my reservations on how far crude can rally in the short-term, this morning’s bullishness can’t be ignored.

That’s we’re going to make a low-risk speculative bet on higher oil… just in case the bulls have something up their sleeve.

 

Resource Company: Penn Virginia (PVA)

Here’s a small-cap oil operator that’s been taken to woodshed the past 10 months. In April 2014 this company was trading at $18 a share as buyout rumors and a big investment by legendary investor George Soros had bulls giddy with excitement.

Then the unthinkable happened…

The Eagle-Ford shale explorer fell out of bed as the price of oil plunged. PVA plunged to $4.50 a share a few weeks ago- a 75% decline from the 2014 highs.

But now investors are gobbling up PVA…

The producer is up 65% from the recent lows on hopes of an oil bottom. If crude surpasses the $54 area in coming days, we’ll likely see another dramatic rush into PVA.

So here’s what we’ll do…

Buy the PVA March 20, 2015 $8.00 calls for $0.70 or better.

The current bid/ask spread for this contract is $0.50/$0.60.

Do not pay more than $0.70!

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

Exit Strategy:

Remember, we want PVA to trade higher. Our first profit target is $9.50 and our second is at $11.00.

The risk control price for this trade is $5.50. If PVA trades below that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading