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, Scott Nations suggested that investors should consider an option strategy in Valero Energy Corporation
VLO. He explained that the spread between gasoline and crude oil is good for a company like Valero Energy Corporation (
VLO), and he added that it is interesting that the stock has been trading sideways since the end of 2008. He also thinks that in the situation like this, a risk reversal strategy would be a good choice.
Scott Nations would buy the June 27 call in Valero (
VLO) for $1.10, and sell the June 22 put for $1.10. This trade offers him a long exposure in Valero (
VLO), and he is financing a purchase of the call option with a sale of the put option. Valero Energy Corporation (
VLO) gained 0.93% today, and it closed at $24.86. If the stock stays above $22 until the expiration, this strategy won't lose any money.
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