oil stock options

OIL STOCK OPTIONS

By www.ProfitableTradingTips.com

http://www.profitabletradingtips.com/

http://profitabletradingtips.com/profitable-trading-tips/oil-stock-options

Big oil companies have spent

decades perfecting a technology that

allows them to extract oil and natural

gas locked up in shale deposits.



This is called hydraulic fracturing or

fracking for short.



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It is the process of injecting liquid

under high pressure into

subterranean rocks forcing open

existing fissures.



After oil companies have spent

billions on developing this process

there is an oil boom in the USA.



The USA is much less dependent of

foreign sources of energy and may

become a net exporter of oil once

again.



But, it appears that no good deed

goes unpunished! As we noted in our

article last week about trading oil

futures,


http://profitabletradingtips.com/trading-investing/trading-oil-futures


There is an oil glut and prices have

fallen dramatically.



marketwatch notes that oil has hit five

year lows, not seen since the depth

of the recession in 2009.


http://www.marketwatch.com/story/oil-continues-slide-trades-near-five-year-lows-2014-12-08


crude-oil prices again tumbled to five-

year lows monday, pressured by

forecasts that a global glut of oil will

persist into the first half of next year.



on the new york mercantile exchange,

crude futures for january delivery clf5,

-4.13% dropped $2.79, or 4.2%, to

settle at $63.05 a barrel.



the u.s. oil benchmark logged the

lowest settlement for a front-month

contract since july 16, 2009, sliding

further just one session after ending

at levels last seen on july 29, 2009.



Consumers are happy as it now costs

less to drive your car, heat your house

and run your factory.



But oil stocks are hurting. Our interest

at this time is in how long this

situation will last, when it will turn

around and how to trade oil stock

options to make a profit.



Oil Stocks



The St. Louis Post-Dispatch reports

that energy shares were a prime

reason for a recent drop in stock

prices.


http://www.stltoday.com/business/local/energy-stocks-lead-an-early-decline-as-oil-sinks/article_2efeee83-b023-5dde-a7a8-7c0c446881ff.html


U.S. stocks fell in afternoon trading on

Monday as a drop in crude oil prices

to a five-year low hammered energy

stocks.



Weak Chinese trade figures and news

that Japan’s recession is deeper than

initially thought also weighed on

markets.



oil impact: energy shares in the s&p

500 dropped 4 percent,



by far the biggest loss among the 10

sectors in the index that followed a

drop in the price of crude oil on more

evidence of weak growth in asia.



benchmark u.s. crude sank $3.05, or

4.6 percent, to $62.78 a barrel in new

york. brent crude,



which is used to price oil sold on

international markets, dropped $3.08,

or 4.5 percent, to $65.99 a barrel.

both prices are at their lowest levels

since 2009.



two big energy companies in the dow

, chevron and exxon mobil, fell

sharply.



chevron lost $4.35, or 3.9 percent, to

$106.53, and exxon mobil fell $2.40,

or 2.6 percent, to $91.42.



The point of looking at oil stock

options at this point is that it may take

months or even years for the price of

oil to come back up.



If the recessions in Japan and Europe

and the economic slowdown in China

weigh heavily on world economies the

supplies brought to the surface by

fracking technology may be creating a

long term oversupply.



Oil Stock Options



Even with the high volatility of options

trading in energy stocks it is possible

to ferret out potentially profitable

trades in the near term.



An example is highlighted in Forbes

Stock Options Channel.



They discuss an options approach

for Exxon Mobil.


http://www.forbes.com/sites/stockoptionschannel/2014/12/08/one-put-one-call-option-to-know-about-for-exxon-mobil-16/


this week we highlight one interesting

put contract, and one interesting call

contract, from the january 2016

expiration for xom.



the put contract our yieldboost

algorithm identified as particularly

interesting, is at the $60 strike



which has a bid at the time of this

writing of 92 cents.



collecting that bid as the premium

represents a 1.5% return against the

$60 commitment, or a 1.4%

annualized rate of return (at stock

options channel we call this the

yieldboost).


oil stock options

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