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Phillips 66 (NYSE:PSX) broke out of its recent consolidation range on Tuesday, and we’re expecting some fundamental factors in the oil space, such as falling crude supplies, to support that breakout.
Refiners look like an interesting opportunity right now. And Tuesday PSX shares started moving up considerably as investors responded to their positive forward outlook. Peers like Valero Energy Corporation (NYSE:VLO) and Tesoro Corporation (NYSE:TSO) saw some upside, too, but not like PSX did…even though the data that Phillips shared was fundamental and systemic in nature — not something special to them. It looks to us like even flat inventories should be flowing through to the refiners.
Another reason that we decided to play Phillips 66 in instead of some of the other energy names is that PSX is giving us a better balance between sufficient liquidity and normal volatility levels.
Here’s our trade:
Buy to open the PSX August 18th $85 Calls for ~$1.05.
While the August expiration date doesn’t give us all that much time with this trade, we’re expecting a relatively short-term move in PSX that will send our call options higher.
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InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered ÃÛÌÒ´«Ã½ Technician (CMT) designees, are co-founders of LearningÃÛÌÒ´«Ã½s.com, as well as the co-editors of . Their newest venture, , is a live, interactive trading room in which they go deep into their “bag of tricks” to choose the best options strategy for that specific moment in time. .
