Buy Alert: November 21, 2014

Marcus Haber | November 21, 2014

Buy Alert: November 21, 2014

Trade Details

Buy Cheniere Energy (LNG) December 20^th 70 Puts for $1.75 or better

Why?

I actually like LNG long-term. However, natural gas traders are getting a little ahead of themselves right now, with the commodity making something of a parabolic move. Yes, the weather is a factor. However, I believe the commodity is going to pull back in the next month, and LNG will come with it. Moreover, LNG is one of the few energy companies holding its gains this year, but I’m expecting some profit taking will occur before the end of the year.

Let’s buy the 70 puts in December. Conservative investors can take profits at $68.50. Aggressive investors can hold down to $65. For risk control, conservative traders should exit at $80, while more aggressive traders can hold up to $85.