In a press release dated January 8, 2007, Nexen (NXY) announced a major oil field prospect in the North Sea commenced production. The stock is experiencing heavy trading today at 128% of its average volume. The stock has advanced 3.5% today and over 10% in the last week. Nexen’s stock is approaching the 52-week highs it saw in the spring of 2006.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_01_23_Nexen.mp3
Charlie Fischer, Nexen’s President and CEO said, “The Buzzard development is a key component of our North Sea growth strategy that will generate strong economic returns for our shareholders and firmly establish Nexen as a significant competitor in the North Sea. Buzzard is capable of supplying approximately 10% of the U.K.’s annual forecast oil demand at peak rates and has been eagerly anticipated within Nexen, by the market and by other stakeholders in the U.K.”
Buzzard is located in 100 meters of water, approximately 100 kilometers northeast of Aberdeen, Scotland. With gross recoverable reserves of approximately 550 million barrels, it is one of the largest oil fields to be discovered and developed in the U.K. North Sea in over a decade.
Alistair Darling, U.K. Secretary of State for Trade and Industry said, “As one of the largest North Sea discoveries in the last decade, the Buzzard field will significantly boost overall U.K. oil production. The field begins production today and this is good news for the industry and our economy. We know there are still between 15 and 20 billion barrels remaining in the North Sea, and with Buzzard, the U.K. should return to being a net exporter over the next couple of years.” Nexen is a Canadian-based global energy company. Nexen was formed by the combination of the Canadian crude oil, natural gas, sulfur and chemical operations of two subsidiaries of Occidental Petroleum Corporation (OXY).
This is, to some, a little known stock and has not received a lot of attention from analysts such as Jim Cramer and The Motley Fool. However Michael Schmitz, a prominent analyst with Banc of America Securities has given it a prestigious 5 star rating.
Competitors:
Competitors for NXY include: BP plc (BP), Exxon Mobil Corp. (XOM), and Petro-Canada (PCZ).
Potential Trades:
All of the following option trades have 25 days until expiration. Nexen is currently trading at $60.99. These trades were discovered using the powerful suite of option search tools found on PowerOptions website.
| Covered Call – Nexen Inc. (NXY) $ 60.99 (25) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Inch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NXYBL | 07 FEB 60.00 | $3.00 | 4.90% | 4.00% | 4.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bull-Call Debit Spread — Nexen Inc. (NXY) $ 60.99 (25) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Opt |
Strike Info |
Bid Price |
Buy Option |
Strike Info |
Ask Price |
% Return |
Break Even |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NXYBL | 07 FEB $60 | $3.00 | NXYBJ | 07 FEB $50 | $11.20 | 21.20% | $58.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The covered call trade, an in the money covered call, offers 4.9% downside protection and a potential profit of 4.0% if the stock remains unchanged or rises. The net cost of this trade, per 100 options, is $5,799.00.
The second trade is a bull call debit spread. This trade offers 21.2% potential profit if the stock remains above $60.00. If the stock decreases below the break-even price of $58.25, the investment begins to lose money. If the stock price goes below the lower strike price of $50.00, the entire investment is lost. The net cost of this trade, per 100 options, is $825.00.
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions’ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags]Charlie Fischer, Aberdeen, Scotland, U.K., North Sea, Alistair Darling, Jim Cramer, The Motley Fool, Michael Schmitz, Banc of America, BP, British Petroleum Co., NXY, Nexen Inc., OXY, Occidental Petroleum Corp., PCZ, Petro-Canada, XOM, Exxon Mobil Corp., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]