Weekly Update: April 23, 2014

| April 23, 2014

Weekly Update: April 23, 2014

 

Big Picture Outlook:

Things are really starting to heat up in the Ukraine.  Don’t worry, I’ll spare you from regurgitating all the headlines here. 

All you need to know is this…

The US and its allies are on the verge of applying further economic sanctions on Russia.  If these sanctions come to fruition, we could see a portion of Russia’s oil exports come off the global market.

As you may know, Russia is the world’s second largest oil exporter behind Saudi Arabia. 

What’s it mean for global oil prices?

Brent crude, the European benchmark, is on the verge of breaking above technical resistance at $110 a barrel.  If the Ukraine situation takes a turn for the worse, we’ll likely see Brent break towards 52-week highs at $117.

In response to surging Brent, we may see WTI, the US benchmark, break to higher prices as well.

No doubt about it, energy investors are keeping a close eye on this volatile situation!

Let’s get to our open trades…

 

Portfolio Recap:

. . . . Encana (ECA) July 18, 2014 $19.00 Calls

Another week of impressive bullishness for ECA… 

Shares of the Canadian producer jumped to $23.50 last Friday.  That rally sent our July $19.00 calls up to $4.40 a contract, which is a 183% gain from our entry price.

Even though both profit targets have triggered, aggressive investors may want to continue holding these calls until expiration in July.

. . . . Barrick Gold (ABX) May 16, 2014 $21.00 Calls

No luck for Barrick bulls…

Shares of the gold producer sank below our risk control line at $17.90 on Monday.  As a result, conservative investors should be out of this trade.  If you’re aggressive, consider holding these calls for a rebound.

. . . . Freeport McMoran (FCX) May 16, 2014 $31.00 Puts

FCX isn’t doing much of anything.  Shares of the copper producer are still stuck in the $33.00 range as investors decipher economic news out of China.

Remember, our risk control line at $33.50 has been triggered in this trade.  Only aggressive investors should consider holding these puts into expiration next month.

. . . . Abraxas Petroleum (AXAS) June 20, 2014 $2.50 Calls

AXAS is quickly turning into a monster trade.  The small cap oiler shot to the $5.50 area earlier this week.  That rally sent our June $2.50 calls up to $3.00 a contract… a 160% gain!

Both our profit targets have triggered, but aggressive investors should consider holding these calls through to expiration in June.

. . . . Conoco Phillips (COP) May 16, 2014 $67.50 Calls

What a rally for COP!

Shares of the oil major have exploded to 52-week highs at the $74.50 area.  The April rally sent our May $67.50 calls up to $7.00 a contract as of last Thursday.  That’s a hefty 264% gain!

Remember, both our profit targets have triggered in this trade.  As a result, only aggressive investors should hold through to expiration in May.

. . . . BP Amoco (BP) May 16, 2014 $47.00 Calls

BP is back on the march to higher prices. In fact, the oil major jumped to multi-week highs at $49.20 in yesterday’s trading session.  Remember, our first profit at $48.50 has already triggered. 

Aggressive investors should consider holding for our second target at $50.

. . . . Goodrich Petroleum (GDP) June 20, 2014 $17.50 Calls

GDP is running again…

Shares of US oil and gas producer are going crazy after the company reported exceptional drilling results in the Tuscaloosa Marine Shale of Louisiana last week.

At one point, today’s rally had our June $17.50 calls selling at $9.60 a contract. 

That’s an eye popping 611% gain from our entry price of $1.35!

Remember, both our profit targets have triggered in this trade.  However, expiration on our contracts doesn’t occur until June 20th.  So don’t be afraid to hang onto a few of your GDP calls for higher prices!

. . . . Spectra Energy (SE) September 19, 2014 $39 Calls

SE is slowly but surely working its way higher.  Shares hit new multi-month highs at $39.50 on Monday.  Our gains are still small here, but given the time we have until expiration, there’s a very good chance SE makes a dramatic push higher.

Keep holding the SE calls for our first profit target at $42.00, and our second at $44.00.

. . . . Cliffs Natural Resources (CLF) June 20, 2014 $17 Puts

CLF continues to weaken…

The industrial metal miner is within a whisker of 52-week lows at $18.00 a share.  Now, we may see a slight bounce of this technical support level but I still believe CLF has additional downside left in it.  Remember, our profit targets are at $17.50 and $16.00.

Let’s keep holding our CLF June $17 puts for additional gains!

***Editor’s Note***  As you know, we’re getting great results out of the Options Profit Pipeline.  If you’d like to tell me how you’re doing, or if you have any questions or concerns, please feel free to drop me a line at [email protected]

 

Category: Commodity Trading