Weekly Update: August 20, 2014

| August 20, 2014

Weekly Update: August 20, 2014

 

Big Picture Outlook:

We’re in a holding pattern with oil and gas stocks right now…

While the Energy Select Sector SPDR (XLE) broke below important support at $98 a few weeks ago, the ETF is rebounding quite nicely the past two sessions.

What’s that mean?

Given the hefty selloff in energy commodities the past few weeks, now’s not the time to start buying puts in energy names. If WTI rebounds, which I believe it will soon, XLE could rally to test recent highs near $101.

As a result, the risk/reward just isn’t that good for buying puts in oil and gas names right now.

So what do we do now?

Keep a close eye on your current holdings. There’s still plenty of bullish potential in many of our open positions. But more importantly, be ready for the next trade. It will hit your email inbox tomorrow or Friday.

Let’s get to our open position updates…

 

Portfolio Recap: 

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

SE is back at $41 in today’s session. The recent rally has our $39 calls trading at a $1.90- a 58% gain from our entry. We have another month until expiration in this trade, so aggressive traders may want to keep holding for a continued rebound.

Remember, SE already hit our first profit target of $42 in June. That means conservative traders may have already booked hefty profits in this trade.

. . . . Boardwalk Pipeline Partners (BWP) Sept. 19, 2014 $16 Calls

BWP is breaking through $20 resistance! Yesterday’s rally sent our $16 September calls to a $4.30 bid- a 160% gain from our entry.

Remember, $20 was our first profit target so conservative investors may have already taken profits. Aggressive investors should consider holding their BWP calls for our second profit target at $24.

. . . . Halcon Resources (HK) October 17, 2014 $7 Calls

Finally…

HK revealed in an investor presentation that their Blackstone 4H-2 well had initial production of 715 boe/d. While it isn’t as big a well as I was hoping for, the news was enough to inspire investor confidence yesterday.

Upon hearing the news, MLV and Company upgraded HK to “buy” with an $8 price target.

Remember, HK already hit our first profit target of $7.50. As a result, only aggressive investors should be holding HK for a potential rebound.

. . . . Triangle Petroleum (TPLM) October 17, 2014 $10 Calls

TPLM is slowly working its way back towards the $12 area. The company is scheduled to report Q2 earnings on September 8th. With a bit of luck, we’ll see a bullish run for TPLM into the release.

Remember, our first target of $12 has already triggered. As a result, only aggressive investors should be holding TPLM calls for our second target at $14.

. . . . Hecla Mining (HL) September 19, 2014 $3.50 Calls

HL is stuck in a holding pattern at the $3.25 area. There simply isn’t enough buying interest to kick HL above resistance at $3.40. With expiration approaching quickly, we need this silver miner to make a bullish move soon.

Keep holding and remember our profit targets are $4 and $5.50.

. . . . Pan American Silver (PAAS) October 17, 2014 $16 Calls

PAAS was pummeled after their earnings release last week.   While the silver miner reported greatly improved earnings versus last year’s Q2, the results were short of analysts’ expectations.

Given the fact PAAS has done nothing but trade sideways since we entered this trade, our options have lost a lot of time value. Even though PAAS has yet to hit our risk control line at $13.50, conservative investors should consider closing this trade to conserve capital.

If you’re aggressive, keep holding your PAAS calls for higher prices. Our targets are at $17 and $20.

. . . . SandRidge Energy (SD) December 19, 2014 $7 Calls

Not much new to report on SD. The oil and gas explorer is still trading near 52-week lows at $5.

If you’re an aggressive trader and still holding your SD calls, consider sticking with them for a while longer. SD shares are deeply oversold and may see a rebound in the near future.

. . . . Southwestern Energy (SWN) September 19, 2014 $43 Calls

Thankfully, SWN made a quick rebound from $38 to $42 over the past week. But what really has my interest is the fact someone bought 8,000 SWN September $40 calls last Friday.

No doubt about it, the $584,000 bet bodes well for the natural gas producer!

Remember, SWN hit our risk control line at $40.85 in late July. That means only aggressive traders should keep holding SWN calls for a potential rebound.

. . . . Noble Energy (NBL) September 19, 2014 $72.50 Calls

NBL is still chewing on the 200-day moving average at $70. A sustained, high-volume move above this level will greatly increase our odds of NBL hitting our $73 profit target.

Aggressive traders should keep holding their NBL calls for higher prices!

. . . . Valero Energy (VLO) September 19, 2014 $52.50 Calls

VLO hit our first profit target at $54! The recent rally sent our $52.50 calls up to a $2.64 bid, which is a 97% gain from our entry. If you’re conservative, consider taking some profits off the table. If you’re aggressive, hold for our second target at $57!

. . . . Synergy Resources (SYRG) September 19, 2014 $12.50 Calls

SYRG is still working on that $13 breakout. Obviously, we’ll need a sustained push over this level to have any chance of reaching our first target at $14.

But listen to this…

Canaccord Genuity just initiated coverage on SYRG yesterday. They have a “buy” rating and $17 price target on the Wattenberg producer’s shares.

Keep holding your SYRG calls for higher prices!

Until next time,

Justin Bennett

Remember, if you’d like to comment on how you’re doing in the service, or if you have any questions or concerns, please feel free to drop me an email at [email protected]. I’d like to know how you’re doing!

Category: Commodity Trading