Weekly Update: September 3, 2014

| September 3, 2014

Weekly Update: September 3, 2014

 

Big Picture Outlook:

West Texas Intermediate (WTI) crude is all over the map in recent trading. The commodity plummeted $2.60 a barrel yesterday on continued European economic worries.

But today is a different story…

The commodity is higher by $2.30 as I write, which has it retaking the important $95 a barrel area.

What’s the next move?

Since Monday was a market holiday, the EIA’s oil inventory report is scheduled for tomorrow at 11 am ET. If there’s another bigger than expected storage draw, it’s likely we see a substantial rally for oil and the companies producing it.

Now, let’s get to our open position updates…

 

Portfolio Recap: 

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

SE hit our first profit target at $42 again today. As you may remember, this is the second time the pipeline operator has traded up to this level since we initiated this trade in April.

The recent rally has our $39 calls trading at a $2.75- a 130% gain from our entry. If you’re an aggressive trader and still holding this trade, now’s a good time to take profits. Expiration is just a few weeks away.

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

BWP is losing the $20 level in today’s session. With expiration drawing near, now is a good time to collect profits in this trade. Our September $16 calls can still be sold for $3.20- a 93% gain from our entry.

If you’re really aggressive, consider holding a few contracts into expiration on the 19th of this month.

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

HK is rallying today after analysts at Macquarie upgraded the TMS producer to “Outperform” yesterday. We still have ample time to see our October $7 calls regain value, so keep holding any contracts you have left.

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

After a nice rally last month, TPLM is holding steady at the $12 area. If oil rebounds in coming sessions, it’s likely TPLM surpasses the $12.50 high set in mid-June.

Remember, TPLM ran well over our first profit target at $12 in June. That rally sent our calls to $2.80 a contract, which was a 107% gain. Since conservative investors may have already taken nice profits, only aggressive investors should be holding TPLM calls for our second target at $14.

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

With silver trading near $19 an ounce, investors have no interest in sending HL higher. In fact, they’re doing just the opposite. The silver miner is trading at multi-week lows near $3.10 as I write.

With much of time value eroded from our September $3.50 calls, all we can do is simply wait and see what happens in this trade.

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

Despite the fact PAAS has yet to hit our risk control line at $13.50, I suggested conservative investors close this trade two weeks ago. If you’re aggressive, keep holding your PAAS calls for higher prices.

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

SD received an upgrade from Stifel Nicolaus yesterday. Analysts now have a “Buy” rating and $6.75 price target on the small-cap oil producer. Remember, SD crossed our risk control line at $6.60 in early July. That means only aggressive investors should be holding these calls for a rebound.

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

With natural gas dropping 20 cents over the past two trading sessions, SWN is back on the defensive. Remember, we’ll need SWN to trade up to $44.83 ($43 strike + $1.83 purchase price) by expiration for us to break even on this trade.

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

If it weren’t for yesterday’s downdraft in oil, I have little doubt NBL would be trading at our $73 price target today. Alas, the oil and gas producer is trading at $71.20 as I write. With expiration drawing near, we need NBL to jump higher soon.

Remember, NBL must rally past $73.50 ($72.50 strike + $1.00 purchase price) for this trade to get back in the green.

Only aggressive traders should be holding their NBL calls for higher prices.

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

Unfortunately, VLO couldn’t surpass technical resistance at $54 in recent trading. The refiner traded down to the low $53 area in today’s session. With expiration just around the corner, we’ll likely see the value of our in-the-money $52.50 calls fluctuate wildly in coming sessions.

Remember, VLO already hit our first target at $54, so if you’re conservative, consider taking profits off the table. If you’re aggressive, hold for higher prices.

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

SYRG jumped to $13.75 in today’s session. Recent advances in the Wattenberg producer’s shares has our $12.50 calls trading at a $1.10 bid, which is a 37% gain from our entry. Expiration is approaching in this trade, but let’s keep holding for a potential run to our first profit target at $14.

. . . . Whiting Petroleum (WLL) October 17, 2014 $90.00 Calls

WLL came within $0.08 of our first profit target at $93 last Friday. The late week rally sent our $90 calls up to $5.10 a contract- an 88% gain from our entry. If oil rebounds in coming sessions (which I believe it will), WLL should easily surpass $93 and head towards our second target at $98. Keep holding your WLL calls for higher prices!

. . . . Penn Virginia (PVA) October 17, 2014 $15.00 Calls

Despite the recent spate of bullish options activity, PVA is still trading just shy of the $15 area. Obviously, we’ll need a strong move higher to get our $15 calls firmly in the money.

Keep holding your PVA calls for a rally. Our targets are $16 and $18.

. . . . Silver Wheaton (SLW) December 19, 2014 $25 Calls

As you’re likely aware, the price of silver suffered another minor downturn yesterday. The metal sank to $19.11, which is just shy of major technical support at $19 an ounce.

No doubt about it, if bulls are going to send silver higher, they should do it off this support level. 

Keep holding your SLW calls for a rebound in the price of silver. Our risk control line is at $22.90 while our profits targets are at $27.50 and $30.00.

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