Weekly Update: April 9, 2014

| April 9, 2014

Weekly Update: April 9, 2014

 

Big Picture Outlook:

Bulls are coming out of the woodwork this afternoon…

As you may know, the Federal Reserve released the minutes from the last FOMC meeting today.  Investors found Fed Chairwoman Janet Yellen likely misspoke a few weeks ago when she announced interest rates would rise 6 months after the end of quantitative easing.

Instead, today’s notes revealed the pace of tightening will completely depend on incoming US economic data.  In other words, interest rates will likely stay near zero as long as conditions remain questionable.

Not surprisingly, today’s dovish remarks are sending the dollar swiftly lower. 

On the contrary, oil is surging above $103 a barrel.  Remember, the March high for crude is at $105. If crude can break above that important level, we could see an unusual Spring run to $100.

Let’s get to our open positions…

 

Portfolio Recap:

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

ECA is going crazy!

Shares of the Canadian oil and gas producer surged to $22.75 in recent trading.  As you know, that’s beyond our second profit target of $22.00.  Thanks to the recent rally, we’re sitting on a 148% profit in our July $19 calls.

Now that our second profit target has been hit, everyone should consider taking their gains to the bank.

However…

There’s a very good chance ECA continues running higher.  And the fact that these calls expire in July gives us plenty of time to collect further gains.  So if you consider yourself a super aggressive trader, continue holding the ECA $19 calls for additional upside.

Congratulations on a great trade!

. . . . Oasis Petroleum (OAS) April 17, 2014 $45.00 Calls

Since we have expiration next week, time is running out for OAS.  We need this Bakken oil producer to jump higher by the end of next week.  But given the current rally in oil prices, there’s a very good chance it does so.

Remember, only aggressive investors should be in these calls right now.

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

ABX isn’t really doing much of anything right now.  Shares of the gold producer are stuck in the $18.00 range as investors wait for the next big move in gold prices.  Remember, only aggressive investors should be in these ABX calls at this point.

If you’re still in, keep holding for a potential rebound.

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

With copper holding above $3 a pound, FCX has managed to rally back to the $34 area.  Since this trade we based on the potential breakdown in copper prices, our FCX puts are not working out as planned.  With our risk control line hit, only aggressive investors should be in these FCX puts.

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

AXAS is back on the move!

Shares of the small-cap oil and gas producer have surged to $4.40 in recent trading.  As of this writing, we’re sitting on a 65% gain in our June $2.50 calls.  Remember, our second profit target is at $5.  Aggressive investors should consider holding the AXAS calls for higher prices!

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

After a short bout of selling, COP is back on the upswing…

As a matter of fact, shares of the oil major are surpassing multi-month highs at $71 today!  As a result, our May $67.50 calls are trading at $4.05 per contract.  That gives us a 110% gain from our entry price of $1.92.

Now remember, our second profit target is at $72.  So aggressive investors should consider holding these calls as COP may reach that level soon!

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

Much like COP, BP had a short burst of selling in recent days.  But with oil prices surging back above $103 today, BP is gaining ground once again. 

As of this writing, shares are trading hands at $48.73, which is just a stone’s throw away from last week’s high at $48.80.  If BP can get past this technical resistance area, it will greatly increase the odds of it hitting our second profit target at $50.

Remember, BP already hit our first profit target at $48.50. As a result, conservative investors should be taking some 100% gains to the bank.

However, aggressive investors should consider holding for further gains!

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

GDP came within a whisker of our first profit target at $18 this morning.  Last week’s rally in this oil and gas producer sent our June calls up to $2.45 per contract- a solid 80% gain from our entry.

We have plenty of time left here, so keep holding these calls for higher prices!

 

Category: Commodity Trading

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