MRO -- COVERED CALL IDEA
Updated
With an implied volatility rank of 98 and an implied volatility of 79, MRO presents a good covered call opportunity here with a return on capital of greater than 10% if called away at the nearest short call strike (13).
Here's the setup (which, as always, may require tweaking after NY open, since these off hours quotes have a tendency to have wide bid/asks):
Buy 100 shares MRO at 12.59
Sell 1 Feb 19 13 short call
Entire Package 11.20/contract ($1120)
Max Profit: $180 (if called away at $13)
Notes: A word of caution is in order here with this one. The universe of downtrodden oil and gas plays is quite large and is growing (for obvious reasons). finance.yahoo.com/news/oil-bankruptcies-mark-devastating-end-164120128.html This company -- along with a bunch of others in the sector and, in particular, those exposed to oil/shale sands operations (this one is) -- may continue to trundle into the dirt. Moreover, earnings is right around the corner (on 2/17) and they, in all likelihood, are going to continue to disappoint. Their last profitable earnings quarter was for the period ending 8/20/14 and the only bright spot has been that, for the last couple of earnings, earnings did not disappoint as much as expected ... .
Here's the setup (which, as always, may require tweaking after NY open, since these off hours quotes have a tendency to have wide bid/asks):
Buy 100 shares MRO at 12.59
Sell 1 Feb 19 13 short call
Entire Package 11.20/contract ($1120)
Max Profit: $180 (if called away at $13)
Notes: A word of caution is in order here with this one. The universe of downtrodden oil and gas plays is quite large and is growing (for obvious reasons). finance.yahoo.com/news/oil-bankruptcies-mark-devastating-end-164120128.html This company -- along with a bunch of others in the sector and, in particular, those exposed to oil/shale sands operations (this one is) -- may continue to trundle into the dirt. Moreover, earnings is right around the corner (on 2/17) and they, in all likelihood, are going to continue to disappoint. Their last profitable earnings quarter was for the period ending 8/20/14 and the only bright spot has been that, for the last couple of earnings, earnings did not disappoint as much as expected ... .
Note
Filled today for a 10.70 debit.Note
Rolled my short call down to the 8 strike for an .86 credit. As noted with my USO covered call roll down, you generally do not want to roll your short call in a covered call down below your cost basis ... .
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