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Valero Energy Corp. (NYSE: VLO) opened at $63.60. So far today the stock has hit a low of $62.93 and a high of $64.00. As of 11:00, VLO is trading at $63.50, down $1.09 (-1.7%).

After hitting a one year high of $78.68 in July, the stock fell hard as oil prices have been retreating over the past few weeks. Oil prices are slipping further today, as fears about storm damage in the Gulf of Mexico area are waning, bringing oil stocks down as well. Technical indicators for VLO are bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $80 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make a 4.2% return in just 2 months as long as VLO is below $80 at October expiration. VLO would have to rise by 26% before we would start to lose money.

VLO has not been above $80 ever and has shown some resistance around $67.50 recently. This trade could be risky if crude prices spike higher due to tropical storms or unrest in the Middle East, but even if that happens, VLO could have trouble going higher than $78 where it topped in July.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in VLO.

Valero (VLO) down as hurricane misses refineries originally appeared on BloggingStocks on Mon, 20 Aug 2007 12:08:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Hurricane DeanHurricaneDeaninthenewsInvestors OberverInvestorsOberveroiloptionsValero EnergyValeroEnergyVLOMon, 20 Aug 2007 12:08:00 EST<![CDATA[Oil prices move higher with broader market]]>http://www.bloggingstocks.com/2007/08/17/oil-prices-move-higher-with-broader-market/http://www.bloggingstocks.com/2007/08/17/oil-prices-move-higher-with-broader-market/http://www.bloggingstocks.com/2007/08/17/oil-prices-move-higher-with-broader-market/#commentsFiled under: , , , , , ,

Oil prices have been moving higher, as the market reacted to this mornings discount rate cut by the Federal Reserve. Crude prices have pulled back a little from earlier day highs, but still prices are trading up $0.57 to $71.57. Earlier in the session prices had managed to go as high as $72.54.

Oil has gotten beat up lately. Traders have been concerned that the credit concerns blanketing the market would lead to slower economic growth and less demand for oil. Another factor that has been pushing prices lower is Hurricane Dean, which is expected to close in on the Gulf of Mexico next week.

While concerns over Hurricane Dean are still on traders' minds, nothing could outdo the optimism brought on by this mornings actions by the Fed and the impact on the overall market. But don't be surprised to see some price pressures next week, especially if Dean gathers further strength on its way into the Gulf.

Continue reading Oil prices move higher with broader market

Oil prices move higher with broader market originally appeared on BloggingStocks on Fri, 17 Aug 2007 14:05:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bpcvxhurricane deanHurricaneDeaninthenewsoiloil pricesOilPricesxomFri, 17 Aug 2007 14:05:00 EST