Ready for serious gains on earnings? You gotta think like an investor and trade like a trader…
Oil prices are falling.
The share prices of oil field service companies—the big ones—haven’t fallen as they have in the past when oil falls.
So… with earnings coming out this week, what to do?
First, think like an investor. Focus on the long term and capital preservation.
Do you really think the world will use less oil two or three years from now? Even Elon Musk doesn’t delete himself with this thought.
Second, trade like a trader. Think cash: What cash can you generate around earnings?
Low risk cash based on an investment approach.
Third, look at the real world.
SLB is NOT an American company and is therefore in a better position to get new contracts in countries where Uncle Sam isn’t welcome: Iran, Libya and eventually Venezuela and maybe even Russia.
Using a long-term approach, consider buying the shares and selling an in-the-money call one or two strikes below the price you paid for the shares.
At the close on Friday, the stock was at $479.35, the $79 call, $1.45.
If you get called out, you make $110 per 100 shares in five days.
I manage my positions—and tell my members to do the same—based on potential annualized returns. So… multiply that $110 by 52, and you get a potential return of 72%.
Just think about it.