OptionsHouse

Options Trading News

November 7, 2011  Mon 8:18 AM CT

CHK: SEE CHART GET CHAIN FIND STRATEGIES
The most difficult thing I have to deal with at the moment is the desire to buy all of the drillers because of the incredible prospects being found all over the world. They are everywhere, especially here, where we know that in five years we are going to be a gigantic exporter of natural gas.

Yet all that happens is that we hear about the funding gaps from oil and gas companies, and the fact that the service companies aren't making enough, especially if oil crashes.

TheStreet.com logoTo which I say, you have to be kidding me. If it hasn't crashed yet, why would it crash now? The stuff is going in the OPPOSITE direction. There is no amount of money that companies won't pay to get it out of the ground, and it is worth so much more than the drilling costs.

Doesn't matter. The group trades as if all that matters is the next tick.

But anyone who listened to Chesapeake or EOG Resources or Apache or Occidental or Continental Resources knows one thing: The money for drilling is there and it is growing quickly.

For these stocks, particularly for Schlumberger, Halliburton, Core Laboratories, and Ensco, it is well worth the pain.

Disclosures: Cramer's charitable trust is long APA, ESV, and SLB.

(optionMONSTER and TheStreet.com exchange a select number of posts each day as part of a limited content-sharing agreement.)
Share this article with your friends


Related Stories

CHK

Chesapeake Energy sees 2018 puts

January 29, 2016

The oil and natural-gas producer is down 54 percent in the last three months, and traders are positioning for more possible declines in the next two years.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »