Getting Short PBF

PBF Energy Inc. or (PBF, $22.63, up $0.46) refines petroleum along with supplying transportations fuels, petrochemical feedstocks, heating oils, lubricants and other products within the U.S. PBF Energy is able to make these products in its refineries and then sells their products throughout parts of the United States as well as some regions in Canada. The stock is currently trading at $22.63 per share and is at a 52-week range between $21.20-$42.50. On the year PBF is down 23% and over a 12-month period is down 10.36%.

PBF announced that it has been re-certified with the United States Occupational Safety and Health Administration as a company that has high industrial safety within its programs. In terms of PBF’s performance they were not able to hit earnings expectations the last quarter. However, this could be attributed to the renewable fuel credit expenses that were higher than projected and ended up hurting the company’s earnings. In recent news, PBF has been increasing the amount of Canadian crude oil they will be taking in over the next few quarters, which should be beneficial for reducing costs. They also have signed a contract with Continental Resources with the intent to deliver Bakken crude oil to its refineries.

On July 2, PBF just barely fell into oversold territory in relation to the Relative Strength Index. The RSI has put the stock at a 29.6 reading in relation to other dividend stocks.

PBF looks weak on the chart and with all the Unusual Options Activity to the downside, I think this is a great time to place a bearish risk vs reward set-up in PBF.

My Trade: Buying the PBF Dec 20-15 Put Spread for $1.60
Risk: $160 per 1 lot
Reward: $340 per 1 lot
Breakeven: $18.40

Greeks of this Trade:

Delta:   Short
Gamma: Long
Theta:   Short
Vega:    Long