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Play of the Day: Unrest and uncertainty drive energy exploration and $SFY

|Includes:Swift Energy Co. (SFY)

Guest Analyst: Stutland Volatility Group  (April 15, 2011, 11:32am CDT)

Symbol Analyst Target Price Target Date
SFY $45.00 July 29, 2011

Swift Energy Company (ticker: SFY) is an independent oil and gas company that explores, develops, acquires and operates oil and gas properties. The company focuses on United States onshore and inland water areas of the Texas and Louisiana Gulf Coast and in New Zealand on onshore areas of the Taranaki Basin.

With all the unrest in the world (political unrest, natural disasters and supply/demand economics), energy exploration, specifically oil exploration, is not going away anytime soon. There are more calls for domestic control of our energy supplies and ridding the United States of dependence on the Middle East. Never mind that the US receives over 50% of its energy supplies from Canada and Mexico. Still, oil is a "fungible" commodity and prices globally, no locally, are what really matter.

We know that there will be more drilling taking place, that the US still has several large basins that are easily drilled (compared to some other global oil reserves), and that US-based companies will benefit from this.

SFY is not a well-known firm, but has a strong position. With a current price of $39.51 and a 52-week high $48.19, we think the stock could reach $45.00 by the end of July, and might take a good ride along with the high-driving summer season and steady oil prices.

Play of the Day

Based on Swift Energy Company (ticker: SFY)  current market price of $39.51 and using a target price of $45.00, a target date of July 29, 2011 and $1,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date. Powered by TradingBlock's TradeBuilder. 

 

Stock/ETF Symbol SFY
Analyst Target Outlook $45.00 by July 29, 2011
Strategy (click for details) % Return at Target Probability of breaking
even or better
Buy Aug Call Spread +46% 45%
Buy Aug Call +39% 41%
Sell Aug Put Spread +28% 52%
Buy Stock +13% 57%

* Subject to change due to changing market conditions.

DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock.

 

Stocks: SFY