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Oil Tankers Under Fire, Crude Rises Two Percent

Posted: 14 Jun 2019 03:00 AM PDT

Two tankers torpedoed in Gulf of Oman.

Crude oil prices rose on Thursday, following attacks on two oil tankers in the Gulf of Oman. The Gulf is close to the Strait of Hormuz, where more than 30 percent of the world's oil shipments pass through.

Both tankers reported heavy damage and had their crews were evacuated. The vessel Front Altair was on fire, but afloat, denying rumors that the vessel was sunk.

With no organization taking responsibility for the attacks as of yet, rumors are running rampant.

The event was enough to send oil prices about 3 percent higher on the day, and for energy stocks to lead the market higher.

While this was going on, OPEC released a report that reduced its forecast for growth in world oil demand this year. The expected demand is now 1.14 million barrels per day, down 70,000 from its estimate of 1.21 barrels made last month.

Action to take: Geopolitical events flare up and die out quickly. While this could be a prelude to a bigger problem for the global supply chain, it may also be a one-off event. For the time being, caution is warranted regarding the energy sector, as the "big picture" data is still on the bearish side.

Fiverr Goes Public, Shares Rally From IPO Price

Posted: 14 Jun 2019 03:00 AM PDT

Freelance company joins crowded IPO field.

Online freelance service company Fiverr (FVRR), went public on Thursday, adding to a full calendar for companies making their debut on market exchanges this year.

Shares were initially sold at $21 per share, after being priced in the $18-20 range just before launch. In early trading, they rose into the early $30 range, closing the day 90 percent over their IPO price.

Based out of Tel Aviv, Fiverr provides a platform for freelancers to offer their services to customers worldwide. Each service, known as a "gig" on the site, starts as little as $5, hence the company name.

The company is a poster child for the "gig economy," a growing share of economic work centered around freelancers who have been unable to land a steady job. Unsurprisingly, the company was founded in 2010, when the job market was particularly tough for full-time workers.

Fiverr has had its share of controversy, notably for the cheap rates advertised for graphics services.

Action to take: With shares soaring in their debut, and with no trading data to go on like all IPO's, this is one company to avoid for now. Although if you have the extra time and the right skillset, picking up some extra money via their site may be an attractive way to get paid to develop your skills outside a primary job.

Insider Activity: Encana Corporation (ECA)

Posted: 14 Jun 2019 03:00 AM PDT

Insiders buying at hard-hit exploration company.

On June 12th, multiple insiders picked up shares at Encana Energy Corp (ECA).

These buyers include CEO Douglas Suttles, who bought 5,000 shares, paying over $24,000. CFO Corey Code bought 10,000 shares, paying nearly $50,000. And David Hill, EVP of Exploration, bought 10,000 shares as well. All told, these insider put over $125,000 of their own money to work in shares.

Encana is a smaller player in the industry, but it's doing just well in today's hectic environment for oil. Last year, Encana bought out competitor Newfield Exploration Company (NFX), nearly doubling in size as a result.

With the drop in oil prices this year, shares have declined sizably, despite some of the better operating numbers the company has posted following its acquisition.

Action to take: Among the oil players, Encana is a smaller player. It can have a bigger percentage move during an oil rally than major players in the space. That makes it an attractive speculation, particularly at any price under $5 per share.

Speculators may want to consider buying a January 2020 $5 call option, as a further rally in oil prices—even if just based on news events—could lead to a quick 40-50 percent profit. The January 2020 calls currently trade for around $0.85, or $85 per contract.

Unusual Options Activity: Western Digital Corporation (WDC)

Posted: 14 Jun 2019 03:00 AM PDT

Big option buy suggests huge upside for tech firm.

Could shares of data storage company Western Digital (WDC) rally 50 percent between now and January 2020? One trader is betting so.

On Thursday, over 16,600 options had traded on a January 2020 $55 call for the company. With shares trading around $36.50, that implies a 50 percent upside in shares in the next six months.

The option contract previously had around 1,500 open contracts, so this move represents a ten-fold surge in volume. That's unusual for an option so far out-of-the-money.

Western Digital shares trade near 52-week lows, with the high close to $84 per share. Given how oversold shares look from this steep selloff, and how far they are from their highs, the $55 strike looks somewhat reasonable and achievable for shares to rally to in the coming months.

With a global technological footprint, shares of the company have been held back by fears of a continued trade war impacting economic trade.

Action to take: The January 2020 $55 call option trade occurred around $0.97. So for $97, you could take a flyer on this option as well. If shares rally—and anything tech just might on the right trade war news—these options could move up 200-300 percent. If not, they're cheap enough that any loss would be minimal.
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