Long Energy Stocks: Top Trading Opportunities

Energy stocks in motion

While the energies have been slumping lately, their impact on the S&P 500 is limited. Less than 5% of the index is made up of stocks from this sector. It also means that many portfolios will be underrepresented in this sector.

Twenty-one titles belong to this sector.

Here are some observations.

  • The best 1-year performer is Devon (DVN) – the worst is Philips (PSX).
  • The largest capitalizations by far are Exxon (XOM), Chevron (CVX) and Conoco Philips (COP).
  • The most volatile is Occidental (OXY) – traders have loved this stock for years. Options are also liquid.
  • The stocks that tend to be most correlated daily 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”
  • The bulls may consider selling a put at 30 delta. This can provide lower purchasing power requirements than buying stocks outright, while also providing a lower level of loss. Bears should consider a slightly out-of-the-money call credit spread.

Written by Michel Rechenthin,PhD, tastetrade Research & Development Manager

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