Option Investor
New Plays

New Plays

HAVING TROUBLE PRINTING?
Printer friendly version

MRO - Marathon Oil

Marathon is an integrated oil company involved in all areas of the oil process. They are the 4th largest integrated oil in the US. Last week they announced they were joining with Andersons to build an ethanol plant in Ohio. Personally I think this adds nothing to the price of the stock and it could have been a big factor in Thursday's -4.68 decline. However, traders bought the dip with aggression and MRO rebounded +2.12 on Friday. The week before Marathon announced it was spending $3.2 billion to upgrade its Garyville Louisiana refinery from 245,000 bpd to 425,000 bpd. Marathon is paying high prices to upgrade its plants to process heavy sour crude which trades at a substantial discount to light sweet crude. Marathon also said it was soliciting a partnership with a tar sand operator to refine that specialty crude.

Earnings were the end of October and they shot up to $4.30 per share from $2.16 in the comparison quarter. MRO produces about 365,000 bpd of oil from its global exploration efforts. Marathon is a strong company that has limited exposure to geopolitical events. There is no special event that triggered this play just solid support and the potential for a breakout over $90 on the next bounce in oil.

Company info:

Marathon Oil Corporation (Marathon) is engaged in the exploration and production of crude oil and natural gas on a worldwide basis. The Company operates in three business segments: Exploration and Production (E&P), Refining, Marketing and Transportation (RM&T) and Integrated Gas (IG). The E&P segment explores for and produces crude oil and natural gas on a worldwide basis. The RM&T segment refines, markets and transports crude oil and petroleum products, primarily in the Midwest, the upper Great Plains and southeastern United States. The IG segment markets and transports natural gas and products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol on a worldwide basis. On June 30, 2005, the Company acquired the remaining 38% ownership interest in Marathon Ashland Petroleum LLC (MAP). As a result of the acquisition, MAP became a wholly owned subsidiary of Marathon and was subsequently renamed as Marathon Petroleum Company LLC (MPC).

Buy 2009 $100 LEAP Call VXM-AT

Insurance put: None


******************************
New Watch List Plays Triggered
******************************

PCU - Southern Copper

Southern Copper is a strong producer but recently the rising stockpiles of copper has pushed their price back to strong support at $50. This is a play on growing global economy but the slight hiccup over the last quarter has produced a short term surplus of copper. I believe PCU will weather this dip and return to the new highs it was making just 7 days ago. This is either a picture perfect entry at $51 or a short pause before a major breakdown. We won't know for sure until next month.

I am putting an insurance put on this play but only if PCU trades at $49.50.

Company Info:

Southern Copper Corporation is an integrated producer of copper, molybdenum, zinc and silver. All of the Company's mining, smelting and refining facilities are located in Peru and in Mexico, and it conducts exploration activities in those countries and Chile. With the acquisition of Minera Mexico in April 2005, the Company focuses on three segments: Peruvian operations, which include the Toquepala and Cuajone mine complexes, and the smelting and refining plants, industrial railroad and port facilities, which service both facilities; Mexican open-pit operations, which combined two units of Minera Mexico, Mexcobre and Mexcananea that includes La Caridad and Cananea mine complexes, and smelting and refining plants and support facilities servicing both complexes, and Mexican underground operations known as IMMSA unit, which includes five underground mines that produce zinc, lead, copper, silver and gold, a coal and coke mine.

Breakdown triggered at $51

JUNE $55 Call PCU-FK @ $3.80
(no leaps)

Insurance Put:
PCU-XW Dec $47.50 put only if PCU trades at $49.50


 

Leaps Trader Play Archives