VLO - $96.17 Valero ** Stop loss $91 **
Exit target $108
Valero had the stuffing knocked out of it over the last two weeks. VLO fell from a high of $111 to a low of $95 and a dead stop on its 100-day average. The rebound was lackluster given the break of $59 by crude futures. We are in about the best position we could be in at this time with VLO on support and glimmers of demand on the horizon. If the cold weather appears this weekend as some forecasters expect then crude could rebound taking VLO with it.
There is an interesting chart on the option VLO-AB. Look at a daily chart and you can see where somebody literally sat on $13.10 for a month selling every spike. This is the most visual occurrence of resistance I have ever seen.
Valero will split 2:1 on Dec-16th. We will want to exit before the split.
Valero Energy Corporation (Valero) owns and operates 15 refineries having a combined throughput capacity, including crude oil and other feedstocks, of approximately 2.5 million barrels per day. Valero produces environmentally clean refined products, such as reformulated gasoline (RFG), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur diesel fuel and oxygenates (liquid hydrocarbon compounds containing oxygen). It also produces conventional gasolines, distillates, jet fuel, asphalt and petrochemicals. Valero markets branded and unbranded refined products on a wholesale basis in the United States and Canada through a bulk and rack marketing network. It sells refined products through a network of more than 4,700 retail and wholesale branded outlets in the United States, Canada and Aruba. Valero's retail operations include approximately 1,500 company-operated sites that sell transportation fuels and convenience store merchandise.
January $110 Call VLO-AB @ $5.50
LEAPS are far too expensive and I would expect to be out of the trade by Christmas at the latest.
Exit target $108
Entry $100 (11/09)