Weekly Update: May 7, 2014

| May 7, 2014

Weekly Update: May 7, 2014

 

Big Picture Outlook:

Finally…

After weeks of enormous inventory additions, the EIA reported a 1.8 million barrel drop in storage levels today. No doubt about it, there’s still plenty of oil swimming around in US storage facilities. But today’s report lends credibility to the idea that US crude demand is picking up.

WTI crude is back above the all-important $100 mark on today’s report.

However, gold and silver aren’t faring so well…

Rumor has it Russian President Vladimir Putin is seeking a peaceful resolution to the Ukraine crisis. Investors view today’s news as a big step towards cooling a situation that’s on the brink of disaster. As a result, the flight to safety trade in gold and silver appears to be unwinding.

Let’s get to today’s updates…

 

Portfolio Recap:

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

ECA is at it again!

Shares of the Canadian oil and gas producer popped to yet another 52-week high in today’s session. The rally sent our July $19 calls to $4.80 per contract- a 209% gain from our entry.

Remember, both our profit targets have triggered in this trade. As a result, you should lock in profits on the majority of your position if you haven’t already.

But if you’re aggressive, consider holding the remainder of your calls for higher prices. Expiration is still a couple months away!

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

Barrick is officially a dud. With expiration just around the corner and the stock still in the dumps, our May $21 calls have lost their value. As a result, this trade is officially closed.

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

The situation in FCX is similar to that of ABX. The underlying shares are moving against our option position. And with expiration just a few weeks away, there’s little chance our FCX puts get back in the green. All traders should close this position.

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

AXAS reports earnings tomorrow. With shares of the small-cap oiler trading near 52-week highs at $5.50, we’ve made some solid gains in this trade. In fact, our June $2.50 calls can be sold for $2.80 as I write. That’s a 140% gain from our entry.

Remember, both our profit targets have been hit in this trade. As a result, only aggressive investors should still be holding for further gains. Tomorrow’s earnings have the potential to send AXAS in either direction- and quickly!

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

COP just won’t give up…

The oil major is jumping to yet another yearly high at $78 in today’s session. The rally has our May $67.50 calls rocketing an ask price of $9.75 per contract- a 407% gain from our entry!

However, with expiration just a few days away, all traders should consider exiting these calls for a massive profit.

This trade is officially closed.

Congratulations on an outstanding trade!

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

BP is trying hard to break above the $51 technical resistance zone, which is also the 52-week high. If shares can surpass this important area, we could see another dramatic run higher.

However, with May expiration right around the corner, it’s a good idea for all traders to take their profits to the bank in this trade. Our May $47.00 calls are still selling for at least $3.70 per contract today, which represents a gain of 270%.

Let’s not be greedy. We’re officially closing this trade for some sweet profits!

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

GDP reported earnings yesterday. Results weren’t quite up to analysts’ expectations. As a result, I wouldn’t be surprised to see shares trade sideways to slightly lower for a while.

Remember, we’ve already collected massive gains in this trade. At one point our calls ran to an amazing 600% profit. GDP may find more upside before June expiration, but only the most aggressive traders should consider holding for it.

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

SE reported earnings this morning. The pipeline company beat bottom line estimates by $0.11 and also surpassed revenue expectations. Obviously, this bodes well for further gains in the share price.

However, don’t be surprised to see a few weeks of sideways action in SE. It will take some time for investors to digest the recent earnings news. Remember, we have plenty of time until expiration.

Our profit targets are at $42 and $44. Keep holding the SE September 2014 $39 Calls for additional gains.

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

CLF is attempting a meager bounce off the $17.50 technical support area. However, given the lack of volume in the recent rebound, I doubt shares get much higher than they are now.

Let’s keep holding our $17 puts for further downside in CLF.

. . . . PDC Energy (PDCE) June 20, 2014 $70 Calls

PDCE is seeing a bigger pullback than I would like. Investors are digesting the company’s sub-par earnings results, which were released yesterday.

Unfortunately, shares of the oil and gas producer briefly tagged our $59.00 risk control line this morning. If you’re a conservative investor who chose to close this trade- that’s fine. There are plenty of other profit opportunities coming your way.

However, if you’re more aggressive, consider holding onto the June $70 calls for a rebound. Remember, our profit targets are at $70 and $73.

. . . . PetroQuest Energy (PQ) July 16, 2014 $6 Calls

PQ is on the move!

Shares are breaking substantially higher in today’s session thanks to solid earnings results from the company yesterday. At this point, all you need to do is hang on for higher prices. We have until July to see PQ really tack on some big gains! Our profit targets are at $7 and $8.

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

BWP is still tinkering with the $16 technical resistance area. If you haven’t already, consider adding the Sept. 19, 2014 $16 calls to your portfolio at any price under $1.70. Our profit targets are at $20 and $24, while our risk control line is at $13.90.

Until next time,

Justin Bennett

***Editor’s Note*** Remember, if you’d like to tell me how you’re doing in the service, or if you have any questions or concerns, please feel free to drop me a line at [email protected].

 

Category: Commodity Trading