by Ian Harvey
January 10, 2019
California Resources Corp (NYSE: CRC)
California Resources Corp cratered due to a huge sell-off in crude oil futures. December 24 saw the shares bottom, but not before “Cut-to-the-Chase Members” made a potential profit of 321% with a put option!
At the time of the recommendation, Tuesday, November 27, 2018, oil prices were struggling. Shares were well off their early October almost three-year peak of $50.34 and continued to stare up at their 320-day moving average.
There was a call earlier in November that the stock was oversold at $28.40, but then it again, continued to fall.
Many analysts had the notion that the stock had bottomed, but at the time of the call for the put trade, pre-market saw the share price down by over 4.00%, which did not seem to give that much optimism that a rebound was underway – and it wasn’t – finally falling to a low of $13.26.
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Details Presented Previously……..
California Resources Corp (NYSE: CRC) gained 5.55% yesterday but the struggle is far from over for this oil and natural gas exploration and production company.
Other traders tend to agree with this assumption as there were 12,300 puts on the tape yesterday -- 23 times what's typically seen at this point.
Shares remain well off their early October almost three-year peak of $50.34 and continue to stare up at their 320-day moving average.
There was a call earlier in November that the stock was oversold at $28.40, but then continued to fall.
Again, today, many see CRC nearing a bottom according to Hammer Chart Pattern.
A hammer chart pattern is a popular technical indicator that is used in candlestick charting. The hammer appears when a stock tumbles during the day, but then finds strength at some point in the session to close near or above its opening price. This forms a candlestick that resembles a hammer, and it can suggest that the market has found a low point in the stock, and that better days are ahead.
But again, there does not seem to be that much momentum behind the call; as pre-market sees the share price down by over 4.00%, which does not seem to give that much optimism that a rebound is underway.
The Previous Trade……
** OPTION TRADE: BUY CRC JAN 18 2019 20.000 PUT at approximately $1.40.
So, for “Cut-to-the-Chase Members” members, who managed to execute this trade recommended by Stock Options Made Easy; potential profits of 321% were available at the time.
Entering the option trade at a cost of $1.40 or less; and the price of the option reached $5.90 on December 24, 2018; a profit of 321% was made. Therefore, one options contract would provide a profit of $450.00.
AS ALWAYS THE DECISION IS YOURS!
Between December 28 and January 4, US crude oil February futures rose 5.8% and closed at $47.96. US equity indexes’ recovery might have limited oil’s downside.
A rise in oil prices could boost oil-weighted stocks. California Resources, one of the strongest oil-weighted stocks, rose 14% last week.
Broader markets’ rise and oil’s recovery may have helped energy stocks, and in this case, California Resources, which also beat energy commodities and the broader market last week. US crude oil February futures rose 5.6%, natural gas February futures fell 7.8%, and the S&P 500 rose 1.9%.
However, this optimism may be occurring too soon. Goldman Sachs (GS) slashed its average WTI and Brent crude oil price estimates to $55.50 and $62.50 per barrel this year, from $64.50 and $70, respectively. Concerns about an economic slowdown could be behind the lower forecast, which still implies a 15.7% upside for WTI.
Therefore, NEW Trade to consider……..
** OPTION TRADE: BUY CRC FEB 15 2019 20.000 PUT at approximately $2.00.
Sell price is left to your own judgment.
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, which is obvious that it doesn’t apply in this case; but during earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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