EOT Trade Alert – April 5, 2011
April 5, 2011
Trade Alert:
Buy WPRT October 2011 $30 Calls at $2.80 or better
Company Background:
Westport Innovations (WPRT) is a leader in alternative fuel, low-emissions transportation technologies. They develop technology and products that enable diesel engines to run on compressed natural gas (CNG) or liquefied natural gas (LNG).
Short-Term Catalyst:
Love ‘em or hate ‘em, President Obama just opened the window for a select few natural gas companies to make a killing.
Last week the Commander-in-Chief gave a speech on America’s energy policy. It was mostly the same old story… America needs to reduce its dependence on foreign oil. Blah, blah, blah… we’ve heard it all before. Yet, nothing has changed since Nixon was president, more than 35 years ago.
However, there was one little nugget buried in this speech. And it could be the first step toward natural gas becoming a major player in transportation fuels.
President Obama said…
“In terms of new sources of energy, we have a few different options. The first is natural gas… the potential here is enormous. It’s actually an area of broad bipartisan agreement. Last year, more than 150 Members of Congress from both sides of the aisle proposed legislation providing incentives to use clean-burning natural gas in our vehicles instead of oil. They were even joined by T. Boone Pickens, a businessman who made his fortune on oil. So I ask them to keep at it and pass a bill that helps us achieve this goal.”
It makes perfect sense…
The US is sitting on a wealth of natural gas. It has more energy than all the oil in Saudi Arabia! Why wouldn’t we harness an abundant domestic energy source!?! We’d be crazy not to.
And with today’s technology, it’s possible. Vehicles can run on natural gas instead of oil. We only need the will or the incentive to make the change.
The bottom line is natural gas is our best bet to reduce our dependence on foreign oil. But in order to take the idea mainstream, government needs to push it over the hump.
The exact provisions of the 2011 NAT GAS bill have not yet been made available. But it’s sure to include some big tax credits for the conversion of oil powered trucks to natural gas.
Oilman T. Boone Pickens, a big proponent of the Nat Gas bill, believes it has support from enough members of Congress to be enacted into law by the 4th of July.
That’s where WPRT fits in. The company stands to make a killing converting oil powered engines into ones powered by natural gas. And investors are sure to drive theses shares higher in anticipation of the Nat Gas Act’s passage.
In fact, the stock has already started moving higher on the news. But this is just the beginning. WPRT is the type of speculative momentum play that can generate massive profits for bold investors. And when the Nat Gas bill passes… look out, WPRT could be a juggernaut.
Let’s grab call options on WPRT now before they really take off.
Trade Details:
| Underlying Stock Symbol: | WPRT |
| Current Bid-Ask Price: | $2.30 – $2.65 |
| Option “Buy Up To” Price: | $2.80 |
| Break-Even On Stock At Expiration: | $32.80 |
| Maximum Risk Per Contract: | $280 |
Exit Strategy:
WPRT is trading at $25.14 per share. Resistance levels will be at $30 and again at $35. Remember, we want this stock to move higher. Support levels will be at $20 and $17.50. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.
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Category: EOT Trade Alert
