Halliburton Company (NYSE:HAL)’s stock is anything but in good shape right now, however there is an extremely profitable options play with an almost negligible downside, that has developed owing to current call option prices. Scott Bauer, who is a senior market strategist at Trading Advantage revealed the strategy on Bloomberg.
“[…] I want to buy one of the December $43.5 calls, so just above the market here, and I am going to sell two of the December $45.5 calls. I can even do that for, it doesn’t cost me anything, I am not going to collect anything […],” explained Bauer.
While the cost of setting up this trade is zero, the losses start piling up if Halliburton Company (NYSE:HAL) starts to trade above the $47.5 mark. However, as Bauer explained this is a good position to be in, since $47.5 is proving to be a strong resistance level for Halliburton’s stock.
“[…] This trade in Halliburton Company (NYSE:HAL) I have is taking advantage of very limited upside, I have no risk to the downside, and quite frankly if the volatility comes in, which volatility right now is off the charts, it is going to be a great thing for my trade […],” said Bauer.
Halliburton Company (NYSE:HAL) suffered a pretty significant dip of nearly 11% in its stock price on the last trading day. This was the result of OPEC’s decision not to cut oil production despite falling oil prices. This is going to exert a further downward pressure on the energy commodity which seems to be flooded on the market.
Halliburton Company (NYSE:HAL) has been trying all sorts of things to ensure its survival in the environment of rapidly declining oil price, which is nearly at its four year lows. The major milestone of these endeavors has been the acquisition of Baker Hughes which has made Halliburton Company (NYSE:HAL) the biggest oil services company.
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