Oil Prices Bounce Back and PENN On the Up

PENN Gaming

I’m sorry for my tardiness. I was flying across the country yesterday, and I missed my deadline. I could blame Gogo Wireless (and I will) because it did not work on either flight. So, my Haven Investment Letter was delayed. But let me make this up to you. My recommendation on PENN is already paying off.

Betting on PENN

Before I traveled to Las Vegas, I recommended Penn National Gaming (NASDAQ:PENN). I hope you took action because the stock jumped 7.3% on Tuesday. I think this is going to keep running. And if you’re looking for a way to get in on this casino company, consider the following trade. 

Sell a cash-secured put on Penn. The January 21, 2022 $50 put is selling for $3.40. Sell the put. Set aside the money to own the stock. A 6.8% return over a month is a really nice little trade, and I expect this is going to be a great rebound stock in the coming months. 

If you don’t have the capital for margin, then sell the $50 put and buy the $47 put for the same expiration date. That will require far less margin, and it gives you an attractive entry level if there is any pullback. By selling the $50 put, your breakeven on the trade is $46.60. This is my top rebound stock for January. As I noted, this stock took a number of hits because of tax harvesting. A move to $60 is in the cards.

Long Oil 

We are in the middle of a Santa Squeeze, not a Santa Claus rally. Put covering has really taken off today, and investors need to ride this wave. Even though momentum is negative in the market, there is a really good opportunity to focus on the energy sector. 

I really feel positive about the beaten down master-limited partnerships in the oil and gas space. I’ve said that you can sell the $8 put in April on Energy Transfer (NYSE:ET). That premium of $0.73 offers a yield of 9.1% on a stock that is ridiculously cheap. That’s a higher return than you would earn just buying the stock for its 7.4% dividend. But if that’s not your cup of tea, look for strong energy companies with really good balance sheets. 

So how about Coterra Energy (NYSE:CTRA)? The company has an F-score of 8 and a Z-score of 5.3. The average price target on this stock is $28, according to Tipranks. I think going out to February and buying the $18 call is a good strategy. 

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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