Energy Stocks on the Move
While energies are on a tear lately, their impact on the S&P 500 is limited. Under 5% of the index is comprised of stocks in this sector. This also means many portfolios will be underrepresented this sector.
Twenty-one stocks are in this sector.
Here are a few observations.
- The best 1-year performance is Devon (DVN) – the worst is Philips (PSX).
- Largest capitalizations are Exxon (XOM), Chevron (CVX), and Conoco Philips (COP) by far.
- The most volatile is Occidental (OXY) – traders have loved this stock for years. The options are liquid as well.
- Stocks that have a tendency to be most correlated on a daily basis to the price of crude are OXY (Occidental) and Marathon Oil (MRO). Short term-traders should keep an eye on crude futures, /CL, when trading “Energies”
- Bulls can consider selling a 30-delta put. This may provide lower buying power requirements then buying the stock outright, while also providing a lower loss level. Bears should consider a slightly out-of-the-money call credit spread.
Written by Michael Rechenthin,PhD, tastytrade Head of Research & Development