Company Profile: BP p.l.c. provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. Its Exploration and Production segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trading of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL). This segment has exploration and production activities in Angola, Azerbaijan, Canada, Egypt, Norway, Russia, Trinidad and Tobago, the United Kingdom, and the United States, as well as in Asia, Australasia, South America, North Africa, and the Middle East. This segment also owns and manages crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing and transportation, as well as NGL extraction facilities. BP p.l.c. has interests in the Trans-Alaska pipeline system, the Forties pipeline system, the Central Area transmission system pipeline.
Industry: Energy Closing Price: 36.78 P/E: 5.81 Avg. Vol.: 12,469K
Objective: Take advantage of the market moving sideways or downward. WARNING: There has been positive news about the European Financial Sector. There has been negative news about China. We are at the front end of the 2nd worst month to trade in the market. We are at the beginning of earnings season which is belived to be a positive quarter. Do not make this play if you have any misgivings about market or sector or stock direction. If China reduces it’s demand for oil, BP should stay flat or fall. It is speculated that this will happen. This play has a potential 12% ROI, a 73% probability of a winning trade and lasts 7 days. The chart is not attractive. It looks like a heavy man with the hicups. Jiggling radically in a range. It is, however, in a long term down trend.
Trade: Bear Call Spread on BP. Buy October 14 Calls at the $39.00 strike price Sell October 14 Calls at the $38.00 strike price Allow both calls to expire if the stock stays below $38.00. If the stock makes a strong move to the upside, buy back the short position, and let the long position run until first sign of weakness. Then unwind the long call. This could potentially create a large profit.
Entry Target: Set up the trade when BP is at or below $36.60. For more information on bear call spreads, bull put spreads or upcoming earnings plays visit our free Options discussions or consider an options class.
