Buy Alert: March 18, 2014

Buy Alert: March 18, 2014

 

Option Strategy:

Buy Conoco Phillips (COP) May 16, 2014 $67.50 calls for $2.05 or better.

 

Commodity Outlook: Oil

Crude is bouncing nicely today.  In fact, the commodity is up $1.09 to trade at $99.15 a barrel.  While I doubt oil will be able to rise too far above $100, I am seeing smart investors taking some big bullish bets on oil and gas producers.

Here’s one we need to get into today…

 

Resource Company: Conoco Phillips (COP)

With an $83 billion market cap, COP is one of the largest oil and gas producers in the world.  But as you may know, COP’s share price suffered a steep downturn in the last few weeks of 2013 and the first month of 2014.  COP’s downturn occurred at the same time oil dropped precipitously from the mid-summer high of $110 a barrel.

But since mid-February, COP has been on the rise….

And in today’s trading session, COP is furthering its recent rally by breaking out above $67.50 a share.  What’s more, there’s an unusually large amount of call buying in today’s session.  That means investors are betting the rally in COP continues for a while longer.

Let’s join the bullish party and purchase COP calls.

Let’s buy the COP May 16, 2014 $67.50 calls for $2.05 or better. 

The current bid/ask spread for this contract is $1.88/$1.92. 

Pay no more than $2.05 per contract!

Our official entry price for performance tracking is $1.92.  Your price may be higher or lower.

Exit Strategy:

Remember, we want COP to trade higher.  Our first profit target is the $70 technical resistance area.  We could see additional gains for COP if oil prices make a sustained run above $100 a barrel.  In such a scenario, COP may jump to test 52-week highs at our second profit target of $72.

The risk control price is $65.  If COP falls below that level, conservative investors should consider closing this trade to conserve capital.

 

Category: Commodity Trading