Weekend Trader Alert

Weekend Trader Alert

January 1, 2023

Open Positions Update

  • Close the Verizon (VZ) April 21, 2023, 40-strike put on Tuesday, January 03. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:

Chevron (CVX)

Place a limit order to buy the Chevron (CVX) March 17, 2023 170-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, December 30, this option was offered at $16.10. CVX closed at $179.49 on Friday, December 30.

Do not attempt to enter this position after Tuesday's close.

Please use the following guidelines to manage the position:
  • Exit the position if the option is at a 100% gain from your entry price.
  • If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, January 30, close the position.
  • If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Shares of energy firm Chevron (CVX) are bull flagging on the charts, after a short-term downtrend channel breakout. The equity's +50% year-to-date level has been acting as support, as it slopes higher and holds above its 20-day moving average. With this solid technical foundation in place, we're initiating a new long position on CVX.

There are a few concerns to be on the lookout for, including potential resistance at the $184 through $186 range. A break below the aforementioned trendline could also potentially pressure the stock's price action, as it has typically followed the moving average during bull runs. Further, a break below $174 could potentially send the shares to the 80-day moving average, at the very least.
However, an unwinding of pessimism amongst the brokerage bunch could certainly give the shares a boost. Currently, 16 of 30 covering Chevron stock recommend a "buy" or better rating, which leaves room for analyst upgrades.

Similarly, options traders have been more bearish than usual, and an unwinding of this pessimism could add tailwinds. Data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows CVX sports a 50-day put/call volume ratio that stands higher than 99% of annual readings.

Those looking to speculate with options can do so for a bargain right now. Chevron stock's Schaeffer's Volatility Index (SVI) of 28% stands in the relatively low 25th percentile of readings from the past 12 months, meaning options traders are pricing in low volatility expectations at the moment. Our recommended March 170 call has a leverage ratio of 7.58, and will double on a 12.6% rise in the underlying shares.

Most Recent Recommendations

The information contained herein is intended solely for the individual subscribers, is not intended for institutional investment organizations, and is not legal to be rebroadcast. Please click here for full disclaimer details.

 Limitation on Schaeffer's Investment Research (SIR) liability: SIR liability, whether in contract, tort, negligence, or otherwise, shall be limited in the aggregate to direct and actual damages not to exceed the fees received by SIR from Subscriber. SIR will not be liable for consequential, incidental, punitive, special, exemplary or indirect damages resulting directly or indirectly from the use of or reliance upon any material provided by SIR. Without limitation, SIR shall not be responsible or liable for any loss or damages related to, either directly or indirectly, (1) any decline in market value or loss of any investment; (2) a subscriber's inability to use or any delay in accessing SIR website or any other source of material provided by SIR; (3) any absence of material on SIR website; (4) SIR failure to deliver or delay in delivering any material or (5) any kind of error in transmission of material. SIR and Subscriber acknowledge that, without limitation, the above-enumerated conditions cannot be the probable result of any breach of any agreement between SIR and Subscriber.