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Long Energy Stocks: Top Trade Opportunities

Long Energy Stocks: Top Trade Opportunities

Michael Rechenthin, PhD,

Energy Stocks on the Move

While energies are on a tear lately, their impact on the S&P 500 is limited. Under 5% of the index is comprised of stocks in this sector. This also means many portfolios will be underrepresented this sector.

Twenty-one stocks are in this sector.

Long Energy Stocks: Top Trade Opportunities

Here are a few observations.

  • The best 1-year performance is Devon (DVN) – the worst is Philips (PSX).
  • Largest capitalizations are Exxon (XOM), Chevron (CVX), and Conoco Philips (COP) by far.
  • The most volatile is Occidental (OXY) – traders have loved this stock for years. The options are liquid as well.
  • Stocks that have a tendency to be most correlated on a daily basis to the price of crude are OXY (Occidental) and Marathon Oil (MRO). Short term-traders should keep an eye on crude futures, /CL, when trading “Energies”
  • Bulls can consider selling a 30-delta put. This may provide lower buying power requirements then buying the stock outright, while also providing a lower loss level. Bears should consider a slightly out-of-the-money call credit spread.

Written by Michael Rechenthin,PhD, tastytrade Head of Research & Development

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.