Weekly Update: March 25, 2015

Weekly Update: March 25, 2015

 

Big Picture Outlook:

As I write this morning, all the major stock averages are down quite heavily.  The DOW is off 214 points (-1.19%), S&P 500 down 19.75 (-0.95%), and the Nasdaq is suffering a 73-point drop (-1.65%).

But believe it or not, energy stocks are doing quite well amidst all the broad market selling…

In fact, the Energy Select Sector SPDR $XLE is currently up $1.04 (+1.33%).  And the SPDR S&P Oil & Gas Exploration & Production $XOP is gaining $0.65 (+1.35%).

While one day of energy stock relative strength vs. the broad market doesn’t make a trend, it’s definitely something to take note of.

We may be seeing the start of a rotation into oversold energy names from other overbought sectors.

Let’s get to this week’s updates…

 

Portfolio Highlights:

Editor’s Note: I won’t update every open position every update.  I focus on the positions with significant news or price movement.

. . . . EOG Resources (EOG) April 17, 2015 $95 calls

While EOG is performing well in recent trading, we really need the oil producer to shift into high gear the next few weeks.

Our $95 calls are trading at a $0.62 bid as I write.  In order for us to break-even on this trade, we’ll need EOG to rally to $96.17 ($95 strike + $1.17 premium paid) by expiration.

Given today’s strong energy price action, we still have a good shot at profits with this name.

Our profit targets are at $95 and $97.

. . . . Oasis Petroleum (OAS) May 15, 2015 $15 calls

Unfortunately, OAS sank quickly on Monday when investors learned their competitor, Whiting Petroleum (WLL), couldn’t attain a buyer.  Instead, WLL priced a secondary stock offering at $30 a share.

However, OAS is recovering nicely in today’s trading session.  We’ve yet to hit our $11.50 risk control line, so let’s give this trade more time to develop.

Our profit targets are at $18 and $22.

. . . . Freeport McMoran (FCX) May 15, 2015 $19 calls

Despite the unwelcome news that FCX is slashing their dividend, this trade is starting off well.  The copper and gold miner traded up to $19.50 in this morning’s session, which sent our $19 calls up to a $1.50 bid- a 32% gain from our entry price of $1.13.

We’ll need FCX bulls to push the miner firmly above technical resistance at $19.50 in order for us to achieve further gains.

Our profit targets are at $22.00 and $23.50, while our risk control line is at $15.90.

 

Category: Commodity Trading