| October 15, 2014

October 15, 2014

Trade Alert:

Buy GLOG February 20th 2015 $20.00 Calls at $1.95 or better

Company Background:

GasLog (GLOG) owns and operates a fleet of liquefied natural gas (LNG) carriers.

Short-Term Catalyst:

GasLog is one of my favorite companies. We’ve used call options to profit from a previous upswing earlier this year.  The marketwide selloff has given us another opportunity to cash in as this stock rebounds from the oversold conditions of today.

Right now the liquefied natural gas (LNG) industry is undergoing a major transformation.  More natural gas is being transported as LNG than ever before.

And GLOG is right in the heart of it.

They are the LNG shipping company with the management team, long term outlook, and financial strength to become a central figure in the LNG shipping arena.

Their business model of growth through acquisitions, new ships, and long term contracts is working like a charm.  It’s expected to fuel earnings per share growth of 46% per year over the next five years.

And the best part is GLOG is well insulated against short term changes in the LNG shipping market.  Their focus on long term contracts with well established partners eliminates the risk that other shipping companies have with shorter term contacts.

Here’s the thing…

Nothing has helped GLOG avoid a nasty selloff over the last few months.  The combination of events have contributed to the nearly 50% decline since June.

There was an ugly head and shoulders technical pattern and it broke below the 200-day moving average just as oil and gas prices plunged and investor sentiment toward anything to do with energy turned bearish.

At this point, GLOG is back where it started the year.  The stock started the year at around $17.00. It soared as high as $32.00 in June and now it’s back around $17.00 today.

But the reality is GLOG isn’t going to be hurt as badly as the price decline indicates.  If anything, the market volatility will create new opportunities for GLOG to expand.

To be honest, nobody knows if this is the absolute bottom for GLOG or the market.  But I do know the odds of this stock rebounding over the next few months once cooler heads prevail outweigh the chances that it continues to sell off.

Let’s grab call options on GLOG now to cash in as the stock rebounds from these oversold conditions.

Trade Details:

Underlying Stock Symbol: GLOG
Current Bid-Ask Price: $1.50 – $1.85
Option “Buy Up To” Price: $1.95
Break-Even On Stock At Expiration: $21.95
Maximum Risk Per Contract: $195


Exit Strategy:

GLOG is trading at $16.61 per share.  Resistance levels will be at $24.00 and again at $28.00.  Remember, we want this stock to move higher.  Support levels will be at $14.00 and $13.00.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

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