DK Hedged Options Strategy

Delek US Holdings, Inc. is a sprawling downstream energy company composed of three segments: Refining, Logistics, Retail. It owns 4 refineries located in TX, AK, LA as well as 3 biodiesel facilities in AK, TX, MS. Its Logistics department gathers, transports, and stores crude and refined oil/products for themselves as well as third parties on hundreds of miles of pipelines. Along with a crude oil gathering system that's ~900 miles, DK also has the capacity to store ~10 million barrels. The Retail segment has 248 convenience stores in TX and NM to sell various grades of gasoline and diesel under the DK or Alon brand, which also make a profit selling other products found at gas stations such as food, alcohol, tobacco. DK's customers include oil companies, independent refiners, distributors, utility and transportation companies, the government, and independent retail fuel operators.

DK hit above the MA lines for weeks and looks like it's trending up. The recent growth seen in the energy sector could be considered in its early stages with midterm politics settling down and the market rising with expectations of gridlock. However, the SPX SPY DJIA charts do not show a clear direction, and there could be some worrisome chopping ahead.

This conservative strategy can make up to 11% (25% annualized) while allowing DK room to drop 25% as of April 21, 2023 before any loss.

Buy 1 $32.50 Call 4/21/23
Sell 1 $35.00 Call 4/21/23
Sell 1 $25.00 Put 4/21/23

Capital Requirement: $2500
Win probability: HIGH