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How to Act When Your Energy Lacks Verve (XOP,VXX,EURN)

Posted on May 18, 2020

We’ve got two trades to address this week, both of which expired last Friday.

The first was opened in a directive called Floating Storage: Shippers Resurface that went out on March 19th.

There, we urged you to buy EURN shares for $8.84 and sell the EURN May 15th 10.00 CALL for $0.90 – one CALL sold for every 100 shares purchased.  Total debit on the affair was $7.94.

And today?

After venturing as high as $12.45 in late April, EURN pulled back to close OTM last Friday, our options expired and the stock remains in our possession.  It trades for $9.81, just shy of our $10 target, and we say sell it.

Your take on the trade is still a very robust – and virus free – 23.5% in just two months.

And that’ll do fine.

Even if the Mrs. expected slightly more…

Soap it up!

Next up was our trade from a letter called Closing One Down and VaXXinating Against a Market Pullback.  Issued just twelve days ago, this “SPECULATIVE CALL spread on volatility” recommended you buy the VXX May 15th 39 CALL for $2.28 and sell the VXX May 15th 42 call for $1.29.  Total debit on the bet was $0.99.

Unless you closed out early, like the mad, profiteering Ottawan, the trade was a bummer (gotta keep an eye on that guy).

VXX closed OTM last Friday and we’re out the full cost of the trade, $0.99.

The best trades on offer these last few weeks haven’t always lent themselves to a neat Monday-equity, Thursday-commodity split, and so Matt McAbby and I have been flopping somewhat in order to give you the best earnings potential regardless of asset class.

And so it continues today, where a nice opportunity in the energy sector has just emerged, and we’re laying it out below.

The stock we’re using is among the most liquid on the market, and its options, too, do an abundant trade.  That means tighter spreads and better fills – the gunpowder of the option-trading sniper.

Which stock is it, Huey?

It’s the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP), whose stock jumped 90% through April before plateauing and tailing off last week.

It’s no secret that the oil market

With kind regards,

Hugh L. O’Haynew

 

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