Oil Stock Options

By www.ProfitableTradingTips.com
OIL STOCK OPTIONS

Big oil companies have spent
decades perfecting a technology that
allows them to extract oil and natural
gas locked up in shale deposits.
http://profitabletradingtips.com/profitable-trading-tips/oil-stock-options

This is called hydraulic fracturing or
fracking for short.

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It is the process of injecting liquid
under high pressure into
subterranean rocks forcing open
existing fissures.

After oil companies have spent
billions on developing this process
there is an oil boom in the USA.

The USA is much less dependent of
foreign sources of energy and may
become a net exporter of oil once
again.

But, it appears that no good deed
goes unpunished! As we noted in our
article last week about trading oil
futures,

There is an oil glut and prices have
fallen dramatically.

marketwatch notes that oil has hit five
year lows, not seen since the depth
of the recession in 2009.

crude-oil prices again tumbled to five-year
lows monday, pressured by
forecasts that a global glut of oil will
persist into the first half of next year.

on the new york mercantile exchange,
crude futures for january delivery clf5,
-4.13% dropped $2.79, or 4.2%, to
settle at $63.05 a barrel.

the u.s. oil benchmark logged the
lowest settlement for a front-month
contract since july 16, 2009, sliding
further just one session after ending
at levels last seen on july 29, 2009.

Consumers are happy as it now costs
less to drive your car, heat your house
and run your factory.

But oil stocks are hurting. Our interest
at this time is in how long this
situation will last, when it will turn
around and how to trade oil stock
options to make a profit.

Oil Stocks

The St. Louis Post-Dispatch reports
that energy shares were a prime
reason for a recent drop in stock
prices.

U.S. stocks fell in afternoon trading on
Monday as a drop in crude oil prices
to a five-year low hammered energy
stocks.

Weak Chinese trade figures and news
that Japan’s recession is deeper than
initially thought also weighed on
markets.

oil impact: energy shares in the s&p
500 dropped 4 percent,

by far the biggest loss among the 10
sectors in the index that followed a
drop in the price of crude oil on more
evidence of weak growth in asia.

benchmark u.s. crude sank $3.05, or
4.6 percent, to $62.78 a barrel in new
york. brent crude,

which is used to price oil sold on
international markets, dropped $3.08,
or 4.5 percent, to $65.99 a barrel.
both prices are at their lowest levels
since 2009.

two big energy companies in the dow
, chevron and exxon mobil, fell
sharply.

chevron lost $4.35, or 3.9 percent, to
$106.53, and exxon mobil fell $2.40,
or 2.6 percent, to $91.42.

The point of looking at oil stock
options at this point is that it may take
months or even years for the price of
oil to come back up.

If the recessions in Japan and Europe
and the economic slowdown in China
weigh heavily on world economies the
supplies brought to the surface by
fracking technology may be creating a
long term oversupply.

Oil Stock Options

Even with the high volatility of options
trading in energy stocks it is possible
to ferret out potentially profitable
trades in the near term.

An example is highlighted in Forbes
Stock Options Channel.

They discuss an options approach
for Exxon Mobil.

this week we highlight one interesting
put contract, and one interesting call
contract, from the january 2016
expiration for xom.

the put contract our yieldboost
algorithm identified as particularly
interesting, is at the $60 strike

which has a bid at the time of this
writing of 92 cents.

collecting that bid as the premium
represents a 1.5% return against the
$60 commitment, or a 1.4%
annualized rate of return (at stock
options channel we call this the
yieldboost).

Oil Stock Options

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Oil Stock Options