Wednesday May 21, 2014 | Volume 121, Issue 8


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LNG Has Built Base: Ready For Blast Off

by Steven Place
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The themes for 2014 have been rotation and reversion.

Stocks that worked very well last year have been hit the hardest, and there has been a very defensive rotation into materials and consumer staples. Certainly not the most bullish part of the market cycle.

Many energy names are standouts that are much stronger than damaged

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Cheniere Energy Inc. (LNG) is in the liquified natural gas game, and judging by the stock price the game has been good. It is hovering near all time highs and has built a base. A simple breakout play should suffice here-- a move above 60 would be a clean breakout with an initial target at 65.


However because this market has seen its fair share of failed breakouts, a more nuanced trade would be to anticipate the breakout here with a stop under 55 and then sell half once the stock does break 60. With implied volatility at one year lows, long calls are a cheap way to play it-- something like the July 57.50 calls with similar risk management as stock.

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About the Author

Steven Place is the founder and head trader at InvestingWithOptions. He specializes in derivatives trading, focused on equity options. His background in signals and electrical engineering gives him unique insight into how options are priced and how to exploit both price and volatility movement. When he isn't trading and teaching others to become great option traders, he enjoys powerlifting and walking his pet corgi. If you like this analysis and want to learn more, check out the servies we offer at InvestingWithOptions.


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