2 Oil Stocks Getting a Lift From Goldman Sachs

Goldman Sachs weighed in on a number of energy stocks today, including Whiting Petroleum Corp (NYSE:WLL) and Weatherford International Plc (NYSE:WFT)

Mar 11, 2016 at 11:23 AM
facebook twitter linkedin

It's a big day for energy stocks, as crude futures rally on well-received outlooks from the International Energy Agency (IEA) and Goldman Sachs, the latter of which chimed in on a number of names today and said "price lows may have been set" on crude oil. Among oil-and-gas stocks participating in the day's bullish bias are Whiting Petroleum Corp (NYSE:WLL) and Weatherford International Plc (NYSE:WFT) -- each of which could see this upside extended, should skeptics both in and out of the options arena jump ship.

WLL, for instance, is up 7.9% this morning at $8.66, after Goldman Sachs raised its price target to $13.75 from $13 -- territory not charted since early December. The shares have now nearly tripled from their Feb. 25 record low of $3.35, and are on track to notch a second consecutive weekly close north of their 10-week moving average.

Amid this breakout, however, short interest on the stock surged nearly 30%, with these bearish bets now accounting for more than one-quarter of WLL's float. Not only is it impressive that Whiting Petroleum Corp has been able to stage such a sharp rally under intense selling pressure, but it also points to ample sideline cash available to help fuel WLL's fire.

Goldman Sachs upgraded WFT to "buy" from "neutral" and raised its price target to $9.75 from $8. As such, the shares have surged 8.7% to $7.19. Longer term, the shares have been choppy in recent months, but are currently trading 45% above the 16-year low of $4.95 hit in late January.

Skepticism is steep toward WFT, though. In the options pits, short-term speculators are more put-heavy than usual, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 2.79 -- in the 77th annual percentile. Elsewhere, it would take almost a week to buy back all of the equity's shorted shares, at average daily trading volumes. An unwinding of these bearish bets could help propel Weatherford International Plc higher.

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Stock Pick Report


Special Offers from Schaeffer's Trading Partners