PBF Energy (PBF), a refiner and supplier of petroleum products such as jet fuel, is up 15 percent over the past year. One trader sees shares moving higher in the first quarter of 2024.
That’s based on the April 19 $55 calls. With 121 days until expiration, 7,379 contracts traded compared to a prior open interest of 113, for a 65-fold rise in volume on the trade. The buyer of the calls paid $1.36 to make the bullish bet.
PBF shares recently traded for about $44, so they would need to rise $11, or 25 percent, for the option to move in-the-money.
The strike price is about where shares traded in October before selling off, and near the stock’s 52-week high of $56.38.
Energy prices have been volatile throughout the year, which has weighed on profitability. Earnings are off 25 percent, and revenues are down 16 percent.
On the plus side, PBF Energy trades at 8 times forward earnings and a 20 percent discount to its book value.
Action to take: Investors may like shares here, as the company trades at a discount to its value right now. Plus, shares yield about 2 percent.
For traders, the April $55 calls are a reasonable bet, as they stand a good chance of moving in-the-money if energy is a breakout sector once again.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.