Is It Time To Bet On This Old Energy Company?


On CNBC's "Options Action," Michael Khouw of Optimize Advisors said that Phillips 66 PSX is “trading at 14 times its average EPS over the last 10 years and is actually trading at less than 10 times its forward EPS estimates right now.” He suggested using a diagonal call spread.

Check out other energy stocks making moves in the premarket.

Khouw recommended selling the August 97.5 calls at $1.48 and buying the November 85 strike calls at $8.65. This trade involves a payout of $7.17 in premium, which is “significantly less than the distance between the strikes” and is a way to get some long exposure and “take advantage of the fact that, at this point with all the volatility that we’ve been seeing in this sector and every other one actually, you can also look to collect some premium to offset the decay.”

PSX Price Action: Shares of Phillips 66 rose by 2.9% to settle at $84.37 on Friday.


Analyst Ratings



Posted In: Long IdeasOptionsMarketsMediaTrading IdeasCNBCMichael KhouwOptimize Advisors