Dykstra: Unit Corp. Is Another Solid Oil Play

Earlier in the week, I wrote about the technical and fundamental strength at EOG Resources (EOG Quote). The reasons to buy EOG are common among all of the stronger companies in the oil and drilling sector.

With that in mind, today I would like to take a look at Unit Corp. (UNT Quote).

Unit explores for and drills oil and natural gas from its properties in Texas and Oklahoma, and also provides contract-drilling services.

Since peaking out in June, the stock has declined steadily, leveling off in recent weeks. A fire at a Valero refinery made a large dent in Unit's second-quarter earnings, but such events provide buying opportunities once the company recovers and begins full operation again.

With negative sentiment built into the stock price, we only need a quick change for deep-in-the-money (DITM) options to work for us. Taking a look at the company's fundamentals highlights the strength of this stock. With a forward price-to-earnings ratio under 7 and a return on equity of over 25%, the company has the assets and resources that will help generate steady profits.

Knowing the underlying strength in the stock, I will place a limit order to buy 10 contracts of the March $35s (UNTCG) for $14.40 or better. The stock was recently trading at $48.44.

Now, as we do every Friday, let's take a look at your emails.