Trading Statoil as Oil Rises

Everyone knows oil is a one way trade. It can only go up which is exactly why I shaved off a little Statoil (STO) Thursday morning.

I have no idea what direction the next $15 will be for crude oil but the price has practically gone vertical as has the price for STO.

Chances are, if you own any oil stock that is not a refiner or own some sort of oil sector fund it too is up a lot. However, at the hair over $43 I got as an average price Thursday morning, STO is up 38% YTD. As the oil ETF I use is also up a ton, not as much as STO, I am a little heavier than I want to be.

The trade specifically was to sell 25% of STO (subject to any unique client situations). I sold it in the pre-market at an average price of $43.09.

I have done this sort of trade before with Statoil and other stocks including Vale (RIO). There is nothing wrong with taking a little off the table while the stock is still going up.

It is sort of a no lose proposition. If oil keeps going up then I would expect STO to keep following along and if oil goes down I would of course expect STO to drop.

If oil goes to $200 then just about everything energy will go up and I would shave down STO again. (Don't key on $200 because I might shave down at some other level, the key thing is that when something gets very big and out of balance I tend to shave it down.)

Here's one amusing nugget about this trade that ties into the post I had a few weeks ago about renting a stock for the dividend. STO went ex-div Wednesday for $1.65. The price got reduced down to $40.81 and made back the reduction almost immediately.