In recent months the price of natural gas has plummeted and because of this price drop hedge fund Amaranth Advisors lost its investors over $6 Billion. The natural gas industry as a whole could be set up for a reversal.
The natural gas industry’s stocks have experienced nice returns over the last few years with increases in the price of natural gas, but the prices of natural gas stocks have NOT reversed with the price of natural gas, they still remain at their lofty values.
If you expect a reversal in the natural gas stocks – this may be the time to incorporate a “bearish but hedged” stock options strategy like bear call credit spreads.
We used PowerOptions SmartSearchXL to search for bear call credit spreads stock options positions for stocks of companies involved in the natural gas industry on October 2, 2006 with all options expiring on October 20, 2006 (October options expiration day).
The results of this search are shown below:
| SmartSearchXL bear call credit spreads search 10/2/2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Sell Option |
Expire &Strike |
Bid | Buy Option |
Expire &Strike |
Ask | %Return | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EOG | 64.81 (-0.24) | EOGJN | 06 OCT 70.0 (19) | 0.65 | EOGJP | 06 OCT 80.0 (19) | 0.10 | 5.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STR | 81.83 (+0.06) | STRJQ | 06 OCT 85.0 (19) | 0.80 | STRJS | 06 OCT 95.0 (19) | 0.05 | 8.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DVN | 61.74 (-1.41) | DVNJM | 06 OCT 65.0 (19) | 0.90 | DVNJO | 06 OCT 75.0 (19) | 0.10 | 8.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| APA | 62.41 (-0.79) | APAJM | 06 OCT 65.0 (19) | 0.70 | APAJO | 06 OCT 75.0 (19) | 0.05 | 7.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis
Four bear call credit spreads stock options positions were returned, EOG, STR, DVN and APA, with an average potential return of +7.4%, pretty good potential return for a stock option investing strategy of only 19 days.
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the natural gas bear call credit spreads investment strategy.
PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a bear call credit spreads investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing bear call credit spreads stock options positions.
[tags]option investing, stock options, bear call credit spreads, investment strategy[/tags]