News

Trade of the Week – Modified LITT Long – WPL

February 9, 2022

Trade of the Week – Modified LITT Long – WPL

Woodside Petroleum Limited (ASX:WPL) has featured in the media recently for a range of reasons…Beyond media headlines, Q4 company revenues have been boosted significantly by higher realised LNG prices and a jump in sales volumes.

Woodside Petroleum Limited (ASX:WPL) has featured in the media recently for a range of reasons:

  • Woodside purchased BHP’s oil and gas portfolio.
  • Global Infrastructure Partners entered a joint venture with ASX:WPL for a 49% non-operating participating stake in the Pluto Train 2 project.
  • ASX:WPL is withdrawing from its interests in Myanmar following the country’s State of Emergency declared on the 21st of February 2021. 

Beyond media headlines, Q4 company revenues have been boosted significantly by higher realised LNG prices and a jump in sales volumes.

 

Source: Woodside Petroleum Limited Fourth Quarter 2021 Report, p3.

 

Source: Woodside Petroleum Limited Fourth Quarter 2021 Report, p3.

Some contributors to positive sentiment and an increase in LNG price pressure include:

  • Supply issues in Northern Europe and potential future gas storage reserve shortfalls.
  • Geopolitical risks with Russia / Ukraine.
  • China’s continued switching from coal to gas as the country expands its gas distribution networks, import terminals, and gas power projects.
  • An increase in economic activity if economies move towards a ‘COVID normal” environment post-omicron.

With the positive market sentiment pushing the stock through 52 week highs, it has been flagged for a LITT Long trade idea by our trading scanners. ASX:WPL is still trading well below its pre-COVID price levels as it starts it’s breakout move.

Source: Implied Volatility

Source: Implied Volatility

Seeing the stock trades ex-dividend on the 24th of February 2022, we will modify the regular LITT trading strategy and select the February monthly expiry (17th of February 2022) to avoid the complexity of ex-dividend pricing and assignments. We will also select European options to avoid assignment this close to expiry.

This will be a very short term trade, and the position will be very susceptible to short term price movements. If the stock moves above $27.50 you could consider closing the position.

Source: Implied Volatility

For further information on using the Implied Volatility platform you can follow this link, here.

To try trading for yourself using the most powerful Options Trading technology in Australia, click here for a trial for our Implied Volatility platform

We wish you good luck with your trading, and as always if you have any questions, please feel free to contact our trading desk on (03) 8080 5795. Please note, we provide General Advice only. 

Past performance is not a reliable indicator of future performance. 

The opinions expressed in this article are our personal views. 

Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only trade if you are confident that you fully understand what you are doing. From 5 October 2021, under Design and Distribution Obligations, anyone opening a trading account will be required to meet the Target Market Determination criteria of Phillip Capital and subject to an assessment the results of which will determine your eligibility for a trading account, for further information please see here.

If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Any advice provided by *Reach including on its website and by its representatives is general advice only and does not consider your personal objectives, financial situation or needs, and you should consider whether it’s appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. Please click here https://reachmarkets.com.au/general-advice-warning/ to read our full general advice warning.


General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Weekly Trading Sessions

Covering a market update, picking a direction and trade tips for the week

Leave a comment