After taking fast gains on Celgene and Gilead, I’m turning my attention to still oversold names in the oil sector. The double-digit drop in oil prices was a result of a strong dollar, the IMF decision to lower the global growth forecast, and the IEA decision to cut oil demand predictions.
None of it is reason for a 13% plunge in prices, though.
As oil begins to recover from its brutal sell-off, big names should recover more lost ground, as well, including Exxon Mobil (XOM), Nabors Industries (NBR), and Weatherford International (WFT).
The best way to trade these names is by buying a basket. Consider picking up call options on all three, investing an equal amount in each. Do not risk the house. Invest a max of 5% to 10%. Never risk 100% of your portfolio on anything at any time.
Consider buying to open the following:
• XOM January 2015 95 call up to $2.60…
• WFT February 2015 20 call up to $1.05…
• NBR March 2015 19 call up to $2.40…