This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

CVX: Fueling More Growth

Stocks in this article: COP XOM CVX

Do you have any idea how much we were paying for a gallon of gasoline in the month of January, 2009 when Obama began his tenure as president? That month would also begin the nosedive for stocks from Dow 9000 to Dow 6600 by early March. With that understood, we still had to buy gasoline in spite of all the financial chaos extant at the time. Your guess is???

The answer is under $2.00 per gallon! Of course the major oil companies like almost all other things affected by the economy -- especially stocks -- were selling at bargain prices during that period of economic despair. That despair amazingly (for me anyway) still lingers today, almost three years hence! In all that time the despair did not stop Chevron (CVX) from rising over 90% (from $58 per share) to where it stands today at $103. Things change.

For CVX, the key is its excellent balance sheet and income statements. CVX is expected to conclude fiscal year of 2011 with earnings around $13.75 per share. That is a 32% gain over fiscal year 2010's results, which were excellent in their own right.

Buddy Ryan used to say of his wide receiver Cris Carter that "all he does is catch touchdowns." Well, all CVX does is improve their bottom line. But like Carter who was not appreciated by Ryan and who is inexplicably not in the NFL Hall of Fame (yet!), I think that CVX is very under-appreciated by the market.

CVX began 2011 trading around $91. The fact that the stock is barely up 10% for 2011, while growing earnings over 30%, almost qualifies for Wall Street's version of "Believe It or Not!"

Let's further review the fundamental and technical case with Jill and Scott before we get to the trade:

I will toss into the technical mix that I have CVX coiled. Thus, I now expect higher short-term volatility for CVX over the next several weeks as well as an opportunity to trade CVX options!

Given the fact that since volume has been on the lighter side since summer and the market is ripe for a bit more selling due to it being short term overbought, I am expect a bit further downward pricing for CVX over the next few days and lower prices than on your current screen used for this set up. I like CVX to trade higher once the market gets balanced again since it's now overbought short-term.

This trade is medium in risk because it is fully hedged and medium in reward potential because it is hedged, a combination that caps reward. Consider a vertical call spread on CVX expiring in March.

Trades: Buy to open 3 CVX March 105 calls for $3.80 and sell to open 3 CVX March 110 calls at $2.00.

The total risk for the spread is $1.80.

This content brought to you by TheStreet's OptionsProfits. CLICK HERE FOR A 14-DAY FREE TRIAL.

FREE WEBINAR with Mark Sebastian of Option Pit following Cramer's Off the Chart segment using Mark's VIX content from our full day course last weekend with the CBOE. Wednesday, December 14 LINK TO ACCESS WEBINAR

OptionsProfits can be followed on Twitter at

T3Live can be followed on Twitter at

At the time of publication, Skip Raschke, Jill Malandrino and Scott Redler held no positions in the stocks or issues mentioned.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters