The new bull market in oil and energy stocks has finally paused enough for you to climb aboard. Though the sector is teeming with bullish setups, Halliburton Company (NYSE:HAL) is flashing one of the best ones. And that makes HAL stock a top pick for today.
Since bottoming last August near $38, Halliburton shares have been on a rocket ship to the moon. The fun began in earnest in mid-December when the Texas-based oil services company finally felled overhead resistance.
Indeed, once the 200-day moving average gave way, HAL’s launch went vertical.
What’s perhaps most impressive is even though the stock had already rallied from $38 to $53 ahead of last week’s earnings announcement, it still screamed higher after the event on heavy volume to boot. Spectators disappointed at missing out on its ascent can take heart. The stock just formed a picture-perfect six-day pullback to its rising 20-day moving average. Support also looms large in the form of old resistance and a gap fill area at $53.
Yesterday’s trading session formed a long lower wick suggesting that buyers are already emerging to gobble up this dip.
With crude prices still in a strong uptrend, and the energy sector still in bullish territory this dip must be viewed as a buying opportunity.
HAL Stock Bull Put Spreads
Though quarterly earnings has come and gone, the implied volatility for HAL stock options remains pumped. And that means short premium strategies are still paying big rewards. If you’re willing to wager HAL sits above $50 at March expiration then sell the March $50/$45 bull put spread for 55 cents. The vertical spread consists of selling to open the $50 put and buying to open the $45 put.
The initial 55-cent premium represents the max reward and will be captured if the puts expire out-of-the-money. The max risk is $4.45, but you can minimize the damage by exiting if HAL breaks the 50-day moving average at $48.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out his trading blog, Tales of a Technician.
