Option Trade 
Williams Companies Inc (NYSE:WMB) Calls 
Monday, 1st August, 2016

** OPTION TRADE: Buy the WMB OCT 21 2016 25.000 call at approximately $1.30. Place a pre-determined sell at $2.60.

Note: No protective stop losses added -- but if you wish to do so make it $0.55.

by Ian Harvey

August 01, 2016

Williams Companies Inc (NYSE: WMB), an energy infrastructure company focused on connecting North America’s hydrocarbon resource plays to markets for natural gas natural gas liquids (NGLs) and olefins, is set to release second-quarter 2016 financial results after the closing bell today, August 01. Analysts expect Williams Cos. to post earnings of $0.22 per share for the quarter.

Williams Cos. last posted its earnings results on Wednesday, May 4th. The company reported $0.03 EPS for the quarter, missing the consensus estimate of $0.22 by $0.19. During the same quarter in the prior year, the business earned $0.16 earnings per share. On average, analysts expect Williams Cos. to post $0.81 EPS for the current fiscal year and $1.12 EPS for the next fiscal year.

While the market has been trading in its tightest pattern of the last half century, oil prices have been quietly getting crushed. Texas tea is down more than 11% in just the last two weeks. This weakness has carried into energy equities as well, but Friday may have signaled the start of a major turnaround.

Oil prices traded an “outside day,” wherein Thursday’s lows were taken out in a reversal to close over the day’s high. This appears to be the spot to pick up some heavy oil exposure, and this is possible by buying WMB option calls.

Williams is a premier energy infrastructure provider in North America. The company boasts a widespread pipeline system and is one of the largest domestic natural gas transporters by volume. Hence, the company's size and diversity are likely to drive earnings in the to-be-reported quarter.

The company's midstream assets, which are less sensitive to commodity price fluctuations, help it maintain a steady stream of revenues and cash flows in spite of low natural gas prices .

The company’s market capitalization is $18.23 billion. The company’s 50-day moving average price is $22.20 and its 200 day moving average price is $19.04. Williams Cos. has a 52 week low of $10.22 and a 52 week high of $55.42.

The stock currently has Price to Sales (P/S) value of 2.41 where Price to Book (P/B) value stands at 3.07.WMB is currently showing ROA (Return on Assets) value of -1.4% where ROE (Return on Equity) is -10.4%.

WMB is currently showing 755.12 million shares outstanding as compared with the 749.28 million total shares float.

The Stock has its Beta Value of 1.57 and ATR (Average True Range) of 1.08. The Weekly and Monthly Volatility of the stock are 3.32% and 4.48% respectively.

Analyst Input

Brokerage firm Citigroup Assumes its rating on Williams Companies Inc. The shares have been rated Neutral. The rating by Citigroup was issued on Jul 22, 2016.

Also, Williams Cos. had its target price increased by investment analysts at Jefferies Group from $27.00 to $28.00 in a research report issued to clients and investors last Monday. The firm presently has a “buy” rating on the stock. Jefferies Group’s target price points to a potential upside of 14.19% from the company’s current price.

Also, several other equities research analysts have recently commented on the company.

• On Jul 13, 2016, Goldman Sachs said it reinstates its rating on Williams Companies Inc. The shares have been rated ‘Buy’ by the firm.

• On Jun 8, 2016, Jefferies said it maintains its rating on Williams Companies Inc. In the research note, the firm lowers the price-target to $30.00 per share. The shares have been rated ‘Buy’ by the firm.

• Bernstein said it Initiates Coverage on Williams Companies Inc, according to a research note issued on May 11, 2016. The shares have been rated ‘Outperform’ by the firm.

Seven equities research analysts have rated the stock with a hold rating, eight have assigned a buy rating and one has given a strong buy rating to the stock. The stock has a consensus rating of “Buy” and an average target price of $30.10.

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the WMB OCT 21 2016 25.000 call at approximately $1.30. Place a pre-determined sell at $2.60.

Note: No protective stop losses added -- but if you wish to do so make it $0.55.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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