Option Investor

Option Writer Portfolio - April

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UPL - Ultra Petroleum Corp. engages in the development, production, operation, exploration, and acquisition of oil and natural gas properties primarily in the Green River Basin, southwest Wyoming and Bohai Bay, offshore China. It primarily focuses on the development and expansion of a tight gas sand project located in the Green River Basin in southwest Wyoming.

Sector - Basic Materials

Industry - Independent Oil & Gas

EPS Date - May 18 or 19

The stock has gapped up about a point so far. The 70 strike still looks good as an April position. Selling 2 contracts puts us over the $10,000 average but the stock has been a leader in its industry and I want some exposure to Oil. The initial return is above our 10% minimum as well. For those aggressive traders, you can sell up to 4 contracts and still have about a $1,000 initial margin buffer.

The near support is at 73.79 with another line all the way down at 68.19. The 50 DMA is relatively close to the price support line. So a break below and close of 73.30 will be the first out. Crude is a tough play here at all time highs. Here are the risk management particulars.

Risk Management for UPL
Strike Stop = $ 70.00
Cost Basis Stop = $ 68.73
Technical Stop = $ 73.30
Premium Stop = $ 72.23

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