A Long Play on Schlumberger

It has been a one step forward, two steps back kind of year. The drops have been reversed quickly the following day or two, while the gaps to the upside in the morning have been faded by the end of the day. It certainly feels like uncertainty is brewing yet I'm not seeing it in the Market Volatility Index (VIX) just yet. There are a few divergences starting to creep in on the daily chart of the VIX, but until we can get an actual breakdown in price on the larger domestic indices, it also feels like it is going to tread water. I haven't done anything with either the SPDR S&P 500 (SPY) or the VIX, but I am getting tempted to look at some VIX upside plays.

Schlumberger (SLB) staged a fantastic reversal on Friday. This morning, the stock opened higher again after Halliburton (HAL) posted an earnings beat. Since the open, HAL has done nothing but fade, dragging SLB well off its highs as well. I think this presents an opportunity to open a long SLB position via some February 21 $90 calls. The stock appears to have support just above $90, so on any close below that level for two straight days, and I will jettison the puts at a loss....150 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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