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Posts Tagged ‘Chevron’

Chevron Is Right For This Option Strategy

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream.  CVX has an equity score of 9.6 (VERY BULLISH) out of a 10.  This is a covered call position on Chevron Corp (CVX),

OPTION STRATEGY:

Look at the June 95 covered call. For each 100 shares of Chevron Corporation (CVX) stock you buy, sell one June 95 covered call option for an 96.70 (100.30 – 3.60) debit or better. That’s potentially a 3.4% assigned return.

STOCK TREND:

The technicals for CVX are bullish with a weak downward trend.  The stock is under distribution with support at 101.95.  S&P rates this stock 5 STARS (out of five) – strong buy.

RESEARCH NOTES:

S&P maintains strong buy recommendation on shares of Chevron Corp. (CVX) . CVX sees ’12 capex at $32.7B, up from $28B, before acquisition, expected in ’11.  Upstream is slated at $28B (87%), with major capex at LNG and deepwater projects.  We think it will comfortably fund this plan, and possibly boost dividends and buybacks via projected cash flow.  We see CVX thriving from a smaller refining footprint, where Asian exposure will help future results.  About 69% of production is higher-margin oil.  Shares have outperformed peers and benchmarks in ’11, but discounted valuations and solid near/long-term growth visibility remain highly attractive, in our view.

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