Buy Schlumberger long-term call options....

[njfan47]

Schlumberger (schlum-ber-jay) stock has traded down to $93.10 today, down $2.10 from yesterday's close. Buy the January 2017 $80 calls, which are trading at $18.65 bid and $20.45 ask as of right now. The spread is wide, but isn't a problem when you have two years and one month for the stock to get to the breakeven point of $100.45. And with their major competitor, Halliburton, being pre-occupied with their planned merger with Baker Hughes and all the upcoming battles with the regulators over the next 12-18 months, Schlumberger should be able to benefit substantially. If oil keeps going down, this prediction might not be great, but if we are near the bottom, buying the long-term call at $20 could lead to a 150% gain in 25 months.

 

[njfan47]

A mulligan might be needed on this call! Schlumberger stock down $6.86 today to $85.95 as oil got clobbered after OPEC decided not to curtail production. But it could have been worse as SLB hit $83.25 today, which represented a new 52-week low. If oil is going to $60, or even worse, $50, this is not going to be a good play. It might be a good play in 6-9 months if oil stays low and if the stock is in the $70-75 range.