Buy Alert: September 25, 2015
Buy Alert: September 25, 2015
Option Strategies:
Buy Southern Company $SO November 20, 2015 $45.00 calls for $0.85 or better.
Buy Dominion Resources $D November 20, 2015 $72.50 calls for $1.20 or better.
Commodity Outlook: Crude and Precious Metals
We’re switching gears today…
As you know, trading in oil and gold has been painfully choppy and directionless for weeks now. Commodity investors simply aren’t sure of what’s coming down the pipe in regards to global growth.
These indecisive markets are horrible for option trading.
As a result, it’s best to steer clear of oil and metals and their associated companies until we see a strong technical break in one direction or another.
That’s why we’re changing our focus towards the utilities sector today…
We can make the argument that companies in this industry provide an essential commodity to society- electricity.
And here’s the upshot…
Utilities tend to be an investor safe haven in times of overall market uncertainty, which is exactly what we’re seeing now.
So without further delay, here are two utility companies poised for nice gains in coming weeks.
Resource Trade #1: Southern Company $SO
$SO provides electric utility services in Alabama, Georgia, and Mississippi. The company has over 4.4 million customers and around 46,000 megawatts of generation capacity.
Shares of the utility provider are poised to break above an important technical resistance area at $44 in today’s session. Should $SO surpass that level, it has a clean shot to $46 and possibly higher.
So here’s what we’ll do…
Buy the $SO November 20, 2015 $45.00 calls for $0.85 or better.
The current bid/ask spread for this contract is $0.70/$0.75.
Do not pay more than $0.85!
Our official entry price for performance tracking is $0.75. Your price may be higher or lower.
Exit Strategy:
Remember, we want $SO to trade higher. Our first profit target is $46.00 while our second target is at $48.00.
Our risk control line is $42.70. If $SO trades below that level, conservative investors should consider closing this trade to preserve capital.
Resource Trade #2: Dominion Resources $D
$D provides electricity generation and transportation in North Carolina and Virginia. The company also provides natural gas distribution services in Ohio and West Virginia.
$D shares are testing a very important technical resistance line at $70 in today’s session. Should the stock break above this hurdle, it has a very good chance of achieving $74 and possibly $78.
So here’s what we’ll do…
Buy the $D November 20, 2015 $72.50 calls for $1.20 or better.
The current bid/ask spread for this contract is $0.90/$1.05.
Do not pay more than $1.20!
Our official entry price for performance tracking is $1.05. Your price may be higher or lower.
Exit Strategy:
Remember, we want $D to trade higher. Our first profit target is $74.00 while our second target is at $78.00.
Our risk control line is $68.50. If $D trades below that level, conservative investors should consider closing this trade to preserve capital.
Category: Commodity Trading
