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Today’s trade: Swapping ONEOK (OKE) shares for call options

Davis MartinDavis Martin ·

The set-up: ONEOK Inc. (OKE) is a diversified energy company where the stock simply refuses to fall below the 20-day moving average line, despite how slow and sluggish the markets have been. It has room to run higher from here.

The chart: 

I really like when charts give you the indication of a trade. You have to trade what you see, not what you think, or you won’t last very long.

In this case, it is pretty obvious that you set your stops at the 20-day moving-average line and look to capture the slow-moving upside.

How I’m playing it: I bought 350 shares of OKE at $56.50 on Oct. 9, mostly because the options chain lacked any open interest at the time and I wanted some exposure to the trade.

What’s next: Today, I will get out of those shares for a small win, and plow the cash into OKE Jan. 19 $57.50 at-the-money call options. There’s now almost 3,000 in open interest in the pre-market today. My profit target is a simple 10 percent gain, but OKE is a slow mover which is why I’m buying plenty of time to let this one work out in my favor.

#-#-#

Davis Martin is the head trader at DailyProfitMachine.com. He trades SPY calls and puts and swing trades individual stocks and stock options. At the time this article was published on RagingBull.com, he had 350 shares in OKE – which he had never traded before – but was looking to sell them in favor of purchasing 1/19/18 at-the-money call options on the stock as described in this commentary. This will be his first-ever trade in OKE options.

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