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Oil Refiner Trade

Ok I just watched Fast Money and I’ve decided that the refiner trade is going to be my next move. I’m pretty short now but still I have to hedge those shorts but this short will have to go against the grain as oil goes down, refining margins go up. Like last year, the refiners ran up last year with the crack spreads going up but it looks like it may run up again but there are a lot of factors that may contribute to the raise.

1. Oversold

2. Rising Crack Spread

3. Higher Short Interest

The three subject stocks are Tesoro (TSO), Valero (VLO) and Frontier Oil (FTO) I don’t expect the stocks to go too far lower as they are all hitting lows and support levels. See the charts below. I’m debating about which stock to purchase as I plan to sell some upside calls just in case. Or perhaps just buy some calls strategically. Still up in the air. See the charts below. I played with one of them as you see the trends and the supports.