Trade Alert: Our Top Names Pivot To Energy
Bullish bets on two of the four energy names that hit our system's top ten last night.
Energy Setups After Wednesday’s Relief Rally
As regular readers may remember, on Tuesday, before the ceasefire was announced, we placed a bearish trade on oil on the view that the Iran war likely to wrap up soon.
On Wednesday, that thesis started to play out fast: with news of a tentative ceasefire between the U.S. and Iran, oil plunged and stocks ripped higher in a broad relief rally.
A lot of the stocks that spiked the most in Wednesday’s rally were previous Top Names of ours, including photonics names and others tied to the broader AI hardware ecosystem. But those weren’t the names that dominated our Top 10 on Wednesday night. Instead, four of our Top Names were energy-related. That makes sense in light of how our system works: all else equal, it tends to favor names that were down over the last week, anticipating some degree of mean reversion.
Why These Two Names
So today, we’re taking advantage of Wednesday’s drop in energy names to add trades on two of the energy stocks that showed up in last night’s Top 10.
One is a newly public LNG export name, tied to the buildout of U.S. gas infrastructure and to the long-term growth of liquefied natural gas demand. The other is a renewable fuels name that gives us exposure to a different corner of the energy complex, one tied more to agricultural and industrial recovery than to oil and gas directly.
Sticking To Our Process
As usual, we’re maintaining our discipline here. We estimate the fair values of the options structures first, then try to enter them at discounts to those values. That means we won’t always get filled. But over time, we think it’s better to miss a trade than to overpay for one—especially in a tape that’s still moving violently on war headlines, ceasefire chatter, and shifting expectations about what comes next.
That’s the approach we’re taking again today.
Today’s First Top Names Trade
LNG export / energy infrastructure theme
