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Take Your Position: Energy Earnings


Some of the biggest names in the energy space report earnings next week including ExxonMobil and Chevron . How should you game it?

Unless you’ve been living under a rock, you know that over the last six months oil prices have tumbled precipitously from their record highs of $147 a barrel in July.

The global economic crisis has absolutely crushed demand and spread shockwaves up and down the Street. Investors are worried that weak economic growth could have a larger impact on crude than is currently factored into its price.

But on Friday oil clawed it’s way higher largely due to a belief that OPEC is complying with output cuts.

Energy Earnings Outlook

With so many variables what can you expect from the energy space as the big names report earnings next week?

“I think we’re reaching a bottom in oil and I think there are a couple ways to play it,” says Mike Khouw Cantor Fitzgerald's director of US equity derivatives

However he doesn’t think you should play the commodity itself. Instead he says, “take a look at Exxon and ConocoPhillips. Exxon just hasn’t sold off relative to the other integrated oils as much as it should and Conoco has been beaten up pretty bad.”

So what’s the trade? “Long COP and short XOM, concludes Khouw.

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Trader disclosure: On Jan 23, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MS), (BAC), (C), (TM), (MCD); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (GLD) Call Spread; Najarian Owns (GE) Put Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls/Put Spread; Najarian Owns (GNW) Long Calls; Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Owns (MSFT), (TBT), (UNH), (V); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (ANF), (COF), (USO); Finerman's Firm Owns (ROH) Calls

Mike Khouw Owns (XOM) with wires