Call Spread on FANG on 7/23/2014

Diamondback Energy (FANG) is an independent oil and natural gas company.

The company focuses on the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. The company’s activities are primarily focused on the Clearfork, Spraberry, Wolfcamp, Cline, Strawn, and Atoka formations.

As of December 31, 2013, its net leasehold acreage in the Permian Basin was approximately 65,938 net acres; and estimated proved oil and natural gas reserves were 63,586 thousand barrels of crude oil equivalent. The company also held interests in 306 net producing wells in the Permian Basin. 

Shares pulled back yesterday after the firm sold 5 million shares at $87.00 per share. This has created an entry point into the stock. Shares have formed a bullish "cup and handle" and higher share prices are expected for this stock. The firm reports its results the first week of August.

52-Week Trading Range: $32.61 - $93.33

Entry Point: $86.56

Trade Buy 1 August $85.00 Call at $4.60 Sell 1 August $90.00 Call at $2.15 For a net debit of $2.45 Profit/Loss Analysis Breakeven at $87.45 Maximum profit is $255.00 at strike of $90.00 Maximum loss is ($245.00) at strike of $85.00 Closing Summary Sold 1 August $85.00 Call at $0.00 Bought 1 August $90.00 Call at $0.00

Position closed on 8/16/2014 at price of $0.00 with a -100.00% loss in 24 days.

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