So this spread's logic comes from the recent ISM report where real estate (leasing) conditions are expected to remain strong, while capital investment in deep-water drilling falls off a ledge. This spread pits a beautiful land play with crude exposure - TPL
- against a weak, weak drilling company with exposure to the deep-water drilling arena - PKD
. After today's massive sell off in this spread due to geopolitical risks surrounding crude and the perceived leverage that PKD
has to crude prices, this is the perfect time to buy. Also, this sell off mirrors the one that happened recently that was followed by strong buying. I'm going to be long here tomorrow morning. My stop is @ 203, and my target remains about 50% up from where we currently are. Lots of alpha to be found here.