NEU (Long)...

NewMarket Corporation is a holding company that is the parent company with an odd mix of petroleum additives business and Virginia real estate. I'm not really sure how that works out. NEU reports earnings in early February (sometime on or before the 11th). It pays a small dividend that works out to ~1.5%/year at current prices. NEU is optionable, with narrow strikes, but wide bid/ask spreads and low open interest and low volume. Not my favourite setup, but it can work.

NEU scores a 2/0, with 100% on the Momentum screen and 93% on the Peter Lynch screen. Besides those, nothing scores above 70%, so it's not the strongest on the screens.

All that being said, I love the chart. It' just a gently-rising stock that's at all-time highs. Tags of the 50-day EMA have proven to be great buying opportunities and guess what it tagged today with a high-volume hammer. This makes me think it just hit a selling climax and that it has higher to go.

Since earnings are so close, that changes the gameplan a bit. I think NEU will rally into earnings, so I'm going to look to buy some February $120 calls and ride them higher into February. Once February rolls around, I'll have to figure out how to protect the position from earnings risk. It might be with buying puts to create a strangle, or it might be selling other calls to create a call spread, or it might be with both a call spread and a put spread. I'm not sure yet.



Position: none

Disclaimer: This is not a recommendation and is presented for informational purposes only.