When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (CVX) - BUY LEAPS
Buy the Chevron Corporation (CVX) January 2025 $165-$170 out-of-the-money Bull CALL debit spread LEAPS at $2.40 or best
Opening Trade
7-31-2023
Date of Expiration: January 17, 2025
Number of Contracts: 1
If you don’t do options, buy the stock.
Don’t pay more than $3.00.
Chevron is set to become North America’s largest renewable fuel producer as it transforms from its primary focus on oil and gas production. Chevron’s existing renewable energy fuel partnership with Bunge together with Renewable Energy Group’s biodiesel production facilities will enable Chevron to grow more quickly and efficiently than either could do on their own.
In June 2022, Chevron acquired Renewable Energy Group (REG) for $3.15b, combining REG’s world-class employees, leading feedstock capabilities, and growing renewable fuel production with Chevron’s large manufacturing assets and leading marketing and distribution position. By acquiring REG, Chevron is set to accelerate progress toward its goal of growing renewable fuel production capacity to 100,000 barrels per day by 2030.
Chevron is one of the largest publicly traded oil and gas companies in the world with operations spanning worldwide. The only energy component of the Dow Jones Industrial Average, CVX is fully integrated as it participates in every aspect related to energy, from oil production to refining and marketing. The company generates around $95 billion in annual revenues and produces more than three million barrels per day of oil equivalent. It currently churns out oil and natural gas at a 59/41 ratio. As of the end of 2021, the company had proved reserves of approximately 12.4 billion barrels of oil equivalent.
The future looks bright for Chevron as it transitions into the renewable energy space and capitalizes on its partnerships.
Chevron's annual dividend yield: 3.69%.
Here are the specific trades you need to execute this position:
Buy 1 January 2025 (CVX)$165 call at………………………………. $19.40
Sell short 1 January 2025 (CVX) $170 call at ………………………$17.00
Net Cost:………………………………………………….............………...….$2.40
Potential Profit: $5.00 - $2.40 = $2.60
(1 X100 X $2.60) = $260 or 120% in 17 months
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
