Dykstra: Soak Up Some Sunoco Options

With crude oil pushing well above $90 a barrel, I want to take a look at Sunoco(SUN Quote).

At its close on Friday of $71.41, Sunoco is trading well below its 52-week high of $86.40, and as the price of oil continues to rise, it's difficult to find cheap deep-in-the-money calls in the sector.

The peripheral oil industries like drilling have been a favorite of mine of late. However, we have an opportunity with Sunoco now.

At the start of 2007, the company owned and operated 3,800 miles of crude oil pipelines and 1,650 miles of refined product pipelines, and the company's profit margins should continue to improve as oil becomes more expensive. At its present value, Sunoco's stock is trading with a P/E of 8.76 and a PEG of 0.46. The company comes in with a return on equity of 47.55%, quite impressive, as is Sunoco's total debt to equity, which is low. ...