Options Trading: All It Takes Is One Announcement
By Bryan Bottarelli
In this article
It takes just one, unexpected oil announcement to quickly drive prices higher.
The British government said 15 naval personnel have been captured at gunpoint by Iranian forces while patrolling off the coast of Iraq.
This price increase has once again pushed the major oil names higher - noticeably Chevron.
Options Trading: All It Takes Is One Announcement
I'd like to follow up on an investing position that both Adam and I have been harping on for the last 4-5 weeks. And it surrounds the recent price movements of Chevron (CVX:NYSE).
As you know, our WaveStrength Options Weekly charting gave a longer-dated upside forecast on CVX stock going out until June. And as oil prices dipped under $57 a barrel in previous sessions, both Adam and I beat a rather loud and consistent drum about the opportunity to add call options on CVX for super-cheap.
After all, it takes just one, unexpected oil announcement to quickly drive prices higher. And that's exactly what you're seeing today. As I write, oil prices are shooting up to $62.35 per barrel on the news that U.K. sailors have been taken prisoner by Iran.
According to news sources, the British government said 15 naval personnel have been captured at gunpoint by Iranian forces while patrolling off the coast of Iraq. After a U.K. boarding party completed a successful inspection of a merchant ship -- their boat was then surrounded and escorted into Iranian territorial waters. Further details of the situation are unclear as of this writing, but nevertheless the story is having a noticeable effect on oil and energy prices. Reformulated gasoline futures were up $0.08 at $1.965 a gallon, heating oil was up $1.10 at $1.729 a gallon, and natural gas was up $0.023 cents at $7.344 per million British thermal units.
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Options Trading: It's Still Not Too Late…
And of course, this price increase has once again pushed the major oil names higher -- noticeably Chevron. In fact, the call options that Adam and I recommended on February 21 for $1.70 have already traded as high as $2.30 in today's action, good for a 35% gainer. But it's still not too late to get in. After all, we fully expect a continued rise in CVX stock into June to push these calls easily over the $3 level. And that's not the only position we're carrying in WOW. We're also holding the following directional positions:
- Short a major US drug manufacturer that's grossly underperformed the broad-based markets…
- Short a medical appliance and equipment manufacturer that has also been a market laggard (this company lost 3.8% over the last year while the Dow gained 15%. Talk about poor performance!)…
- Long a materials conglomerate that's under the radar of Wall Street -- but one which has been quietly establishing new 52-week highs. This play has already handed us tremendous gains -- and we're looking for more!
- Long a property and casualty insurance company that has just experienced a great upside push that could continue into May.
And many others…
If you'd like to participate in gains like this -- along with all of our other plays -- then I welcome you to take a membership to WaveStrength Options Weekly today.
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Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.
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Related Resources
The Oil Scare: Crude spikes after U.K. sailors captured. - MarketWatch.com
CVX: The Latest on Chevron. - MarketWatch.com