Is Gran Tierra Energy (GTE) worth a flier?

By Travis Johnson, Stock Gumshoe, June 11, 2008

I didn’t want to note this on the main site, because I don’t want to encourage that much larger number of people to look into a speculative trade on a small stock, but I’m finding Gran Tierra Energy (GTE) to be pretty impressive at first glance — if I were able to trade in it (I can’t do so for at least three days, given my disclosure rules here), I would be very tempted to take a small position or to make a small bet on the August options.

In particular, the August $7.50 call (trades for about $1 right now) might be worth a look if you ever like to gamble with options — I of course have no inside information, and I can’t guarantee that it will go up, but with this kind of share price momentum and continuing high oil prices, it is tempting.

I’d pick August, by the way, because that’s when they’re likely to release earnings again (probably mid-August), so there’s a chance for a bump from a ptential earnings surprise even if Navellier’s prediction that it will hit $14 by Friday doesn’t happen. (though do note, the last two earnings surprises have been in the wrong direction, so there’s certainly no guarantee … as always with options, I would never bet more than I’m willing to lose).  Also, volume is fairly decent on those August $7.50s, compared to other strike prices and months.

So we’ve got the earnings and sales momentum that Navellier’s watching, along with possibly increased institutional interest, combined with possible announcements about reserves over the summer, adds up to several catalysts that are far from guaranteed, but which in concert make me more interested in an options bet than I usually am.

I won’t be making the trade, but I am more tempted than usual … just thought you might like to know.  This is not an exhaustively researched opinion like my Seadrill writeup, I won’t be issuing another one of those until a bit later in the month, so we’re talking about just a regular old opinion here, for whatever that’s worth.

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