5 Reasons to Buy Gulfport Energy

Recently I have been posting about a stock Gulfport Energy (GPOR) and how I am bullish on it. Recently we've experienced a slight pull back on the stock and I've been accumulating shares of the stock. I have also started using a new strategy as this stock can move down very fast and although I can lose 100% of my investment it is less than 2% of the risk of buying the common shares and watching the stock go to zero.

My reasons for purchasing the stock are below:

First Reason for purchasing the stock: The stock ranks high on both of my methods of finding and evaluating stocks. The current bull to bear ratio is 12:0, and the current IBD is an A- which is still a buy signal from them. To get more info on these stock rating methods check out the posts under my "hottest blog posts" section.

Second Reason for purchasing the stock: The stock has formed an ascending triangle showing a resistance point at around 6.40 a share, and has broken above it. Usually with these ascending triangles the stock can experience a gain in the height of the triangle or more. Look at the chart below (click chart to enlarge).

Third Reason for purchasing the stock: As you can also see from the chart above the 4+% move up Friday was accompanied by large increase in volume. The 10 day volume for this stock is 402.7 thousand shares, Friday the stock traded very heavy volume of over 1 million shares. The price increase with volume increase is a very bullish sign.

Fourth Reason for purchasing the stock: The stock crossed up above both the 10 and 50 day moving averages and held strongly above both into Friday's session. The chart of this can be seen below the 10 day average is the blue line, the 50 day is the darker green line (click chart to enlarge).

Fifth Reason for purchasing the stock: As you can also see from the chart above, the stock crossed up above the 100 day moving average as of Friday and closed above it.

The Trade:

I have been speculating with this stock by purchasing the July 7.50 Call contracts. The theoretical price at which they can be purchased is $10 a piece. To learn more about opening a call position click here. The volume on these calls is not too heavy, so use caution if planning on opening a position.

If you do not like this method you could always purchase the common shares and write the options out on the stock.

These are just a few of the reasons I have been buying this stock, and plan to purchase more. I will be selling into strength.

Disclosure: Long GPOR

Comments

[ArtfulDodger:]

Macro Hickey wrote: "I have also started using a new strategy as this stock can move down very fast and although I can lose 100% of my investment it is less than 2% of the risk of buying the common shares and watching the stock go to zero."

Said what?

Jun 29 08:11 AM

[Shale Gas:]

"I have been speculating with this stock by purchasing the July 7.50 Call contracts. The theoretical price at which they can be purchased is $10 a piece."

Can you please explain this statement?

Jun 29 09:05 AM

[Marco Hickey:]

Yes sorry for not being more clear. A 7.50 Call contract gives me the right to the shares (100 per contract) at $7.50 until the July options expiration. In return I pay a premium for this "right". The theoretical price or the theo value is the most probable value you could open or close the contract for. This splits the bid/ask price, and as I wrote this article the ask was $20 per contract and there was not a bid ($0 per contract); think of it as averaging the bid and ask prices.


On Jun 29 09:05 AM Shale Gas wrote:

> "I have been speculating with this stock by purchasing the July 7.50
> Call contracts. The theoretical price at which they can be purchased
> is $10 a piece."
>
> Can you please explain this statement?

Jun 29 12:28 PM

[Marco Hickey:]

This strategy is explained at the bottom of the article. I state the theo value is $10 per contract. Assuming I could get the rights to anything above $7.50 on 100 shares of this for $10 versus buying 100 shares for $680 my cost of opening the call position would be less than 2% of buying 100 shares. Although I am more likely to lose 100% of my investment (if it doesn't get over the strike price) it is only $10 compared to if the very volatile stock goes down.


On Jun 29 08:11 AM ArtfulDodger wrote:

> Macro Hickey wrote: "I have also started using a new strategy as
> this stock can move down very fast and although I can lose 100% of
> my investment it is less than 2% of the risk of buying the common
> shares and watching the stock go to zero."
>
> Said what?

Jun 29 12:56 PM