27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
It's not very often that Barron's publishes a bullish article over the weekend and one of Wall Street's most respected firms contradicts it the following week.
That's exactly what happened on Monday.
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Barron's: Bullish On Energy
Although a piece on Charles Schwab donned the latest Barron's cover, there was plenty of favorable ink concerning the energy sector.
One article by Andrew Bary, titled “12 Ways To Play The Energy Slump,” argued that weak prices for oil and natural gas have made some stocks in the sector cheap on a valuation basis.
In addition, a piece from Barrons.com's Teresa Rivas identified a few energy stocks that Tim Rudderow (of Mount Lucas Management LP) likes. Although Rudderow admitted "energy stocks are taking a hit," he explained that, in his opinion, fundamentals for companies in this sector remain strong.
Goldman Sachs: Bearish On Energy
Goldman Sachs analyst Jeffrey Currie, meanwhile, is taking the other side of those trades. In a detailed note, he slashed his prediction for the first quarter average of WTI Crude Oil from $90.00 to $75.00. Currie also downgraded several issues in the sector.
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Interestingly, one of those downgrades was at Anadarko Petroleum Corporation (NYSE: APC). In the report, Currie cut the issue from Buy to Neutral and lowered his price target significantly from $120.00 to $102.00.
Bary's Bullish Stance
Bary, in particular, made the bullish case for Anadarko, citing the company "stands out because it has one of the best records of exploration success, including a massive gas field off the coast of Mozambique, a strong position in both the Gulf of Mexico and continental U.S., and a management that is believed to be open to a sale."
Despite a decline in stock price of nearly 15 percent over the past month, Bary views Anadarko as a solid investment based on management's statements earlier this year that estimated the company's net asset value to be over $140.00 per share. That's a substantial premium to its current price near $88.50.
What's Happening Now?
So far, the market appears to be siding with Currie. In Monday's session, WTI Crude futures declined to $79.44, standing above their recent low of $79.03. That, in fact, represents crude's lowest level since it bottomed out at $78.75 in April 2013.
Additionally, Goldman Sachs' downgrade has taken its toll on Anadarko Petroleum. Shares are down more than 2 percentage points on the day.
Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.