Energy and Real Estate shares continue to show the most relative strength to the S&P500, followed by Consumer Discretionary. Select stocks in the transportation industry group also look bullish, as we’ve seen in the bulk shipping group. ANW, SBLK, SALT.
Marathon (MRO) communicated in March that it agreed to pay $1.1 billion for 70,000 acres in the Permian Basin, as energy giants make more aggressive moves in recent weeks.
Marathon Oil (MRO) is mirroring what we see in the XLE daily chart, with price action changing to a bullish trend in late March. The stock broke out with the group. The chart looks bullish, so we intend to take a long here and sell covered calls prior to the company’s earnings release on Thursday, May 4.
You could trade the stock alone, with earnings approaching, however you could also sell covered calls to enhance your returns. We will look at this possibility, as we think the stock will trade up to or beyond $17.00 in the next two weeks.
You could generate $340 now by trading covered calls. You could buy 1000 shares of MRO at 16.60 (+/-) and immediately sell 10 contracts of 2017 28-APR 17.00 CALL for 0.34. If assigned, you could make an additional $400.00 for a total profit of $740.00. This trade will last 16 trading days. We’ll probably buy shares and sell covered calls at a later date.
- Premium received: $340.00
- Potential Profit if Stock is Above Strike: $740.00
- Break Even: $16.32
The real estate sector ETF (IYR) has been on a winning streak, so we’re also watching a few REITs for potential trades today. Watch your alerts today.
Cousins Properties REIT (CUZ) is one potential day trade we are considering. The stock is fairly inexpensive, so there is some risk associated with its lack of sponsorship. That said, it is supported by bullish price action in IYR. Use the TD setup on the 5 min time frame.
Continue watching crude. As it shows strength, so will the equity indices. Confirm with strength in Junk Bonds (JNK) and High Yield Corporate (HYG). We saw this play out in IWM yesterday, which surprised many with its relative strength.
Disclaimer: Do your Own Research
Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise.
We would like to draw your attention to the following important investment warnings. The value of shares and investments and the income derived from them can go down as well as up; Investors may not get back the amount they invested – losing one’s shirt is a real risk; past performance is not a guide to future performance.