This is a quickie as I close out Friday evening for the fabulous Gumshoe readers — but I just got an email from Adam Lass at WaveStrength Options Weekly (with help from Bryan Bottarelli) that promises the “last sane oil play of the summer,” an option trade that will make money if there are (aren’t there always?) price spikes in energy over the summer months.
Just a quick copy and paste of the tease — sorry, no time for cleverness today:
“It’s a smaller player based out of Houston with operations in North America and Brazil, Asia and Central America. Small is a relative concept in the oil biz, mind you: Our pick has a market cap of $10.85 billion and is sitting on some 2.4 trillion cubic feet of natural gas equivalent of proved natural gas and oil reserves and operates 43,000 miles of interstate pipeline.”
Though the shares have gone up 20% or so so far as oil has climbed, they believe they’ve got an options trade that will be available for about 10 days, and that will allow you to gain 61%.
The company is …
El Paso (EP)
And I regret to inform you that I have no way of knowing what their options math is, so I don’t know which of the summer options they’re recommending for this one. From their relatively low returns I suspect we’re dealing with “right around the money” options, the in the money ones of which indeed have fairly low premiums at the moment. If I had to guess, I’d say they’re looking at July or October options at $16 (roughly 70 cents and a buck, with the shares up 3% today at a touch over $16) … but that’s just a wild guess, you can get options at dollar increments in this one so there are way too many choices to do anything but guess (at least, for one who’s options expertise is as limited as mine).
I owned some El Paso preferred years ago when they were first coming out of some serious trouble, but I don’t know much about how the company is structured or making money at the moment. I wouldn’t buy the shares of this one over other oil and gas companies, but perhaps Adam is right that there’s a good option play in there somewhere — at least you’ll find out quickly if you’re right or wrong.
Enjoy the weekend everyone.
Free and Valuable Insight
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day. He says: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and help you do better." Their free tools are great -- try it out here today.