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Regular people are starting to trade like institutional traders - and they're making a living doing it. But not everyone is successful with their trades. There is a right way and a wrong way. I'm here to help you come up with vetted trade ideas so you actually make money off your trading.
Resilient Trader
Resilient Trader is where smart traders come for vetted ideas.
Every week, we cut through the noise and surface opportunities that institutions are already eyeing, but with strategies tailored for retail traders. Today's setup? Diesel costs $6.28 a gallon, the margin for turning crude into diesel has nearly tripled in a year, and the refiner that owns two of California's last refineries just finished a 10% pullback from its high. Wall Street rates it a Hold with a price target below the stock.
We'll cover:
Why PBF Energy is a Buy at $83.00 or better
Why the refining margin, not the oil price, is the trade
How one defined-risk call spread plays the October 29 earnings report
🔍 Trade Thesis: Refiners Get Paid on the Spread, Not the Barrel
A refiner does not care whether oil is $60 or $100. It cares about the gap between what it pays for crude and what it sells diesel and gasoline for, the "crack spread." On the futures market, diesel now sells for about $100 a barrel more than crude, versus about $35 a year ago.
PBF Energy runs six refineries with about 1 million barrels a day of capacity on the East Coast, Gulf Coast, Midwest and California. It is a pure play: no oil wells, no gas stations, just the spread.
Behind the scenes:
🛢️ The diesel squeeze is global: Middle East disruptions, attacks on Russian refineries and tight inventories have pushed diesel far above gasoline. Retail diesel is up 73% in a year; gasoline is up 42%.
🏭 California just lost 17% of its refining capacity: Phillips 66 closed Los Angeles last year and Valero shut Benicia in April. PBF's Torrance and Martinez plants are two of the ones left standing.
🔧 Martinez is back: the refinery that burned in February 2025 returned to full operations in May. Its first full quarter is the one PBF reports on October 29.
💵 The balance sheet flipped: PBF cut net debt by 62% in one quarter, to $855 million, with one more fire-insurance payment still to come.
$$PBF ( ▲ 1.49% ) earned $6.22 a share last quarter, against a loss of $1.03 the year before, as its refining margin rose to $23.40 a barrel from $8.38. The research desk we follow issued a buy signal on the stock yesterday, on the pullback, and a macro podcast we follow made the same point from the other side: refined products, not crude, are the strongest part of the energy tape.
The honest bear case: this stock has more than tripled from its 52-week low, and crack spreads mean-revert fast. A Middle East ceasefire or a surge in Russian diesel exports would hit the margin before the stock could react. Refining is cyclical, and the CEO said so in his own earnings release.
📊 Overview & Key Metrics
Metric | Figure |
|---|---|
Current Price | $83.00 (Oct. 20 close) |
Market Cap | $9.9 billion |
Trailing P/E | About 7 |
Q2 Adjusted EPS | $6.22 (vs. a $1.03 loss a year ago) |
Q2 Refining Margin | $23.40 per barrel (vs. $8.38) |
Q2 Throughput | 887,300 barrels per day |
Q3 Throughput Guidance | 900,000 to 960,000 barrels per day |
Net Debt (June 30) | $855 million, down 62% in the quarter |
52-Week Range | $25.62 to $92.46 |
Analyst Consensus | Hold (14 analysts), $80.00 average target |
📡 Market Sentiment & Fundamental Drivers
The Street is not on this trade. The average price target sits below the share price, 14 analysts call it a Hold, and about 13% of the float is sold short. That is what a stock looks like when it triples while the models still assume normal margins.
The numbers say otherwise. Last quarter PBF ran 887,300 barrels a day with Martinez only partly back; this quarter it guided to as much as 960,000. Street estimates for the quarter range from $6.84 to $8.26 a share.
📐 Technical Analysis
PBF broke out of a $70 to $78 base on October 1 and ran to a closing high of $91.17 on October 13. Four sessions took it back down 11% to the rising 20-day moving average, and on Tuesday it bounced 2% off that line: a leader resting, not a leader breaking.
Moving Averages:
✅ Bounced off the 20-day at $81.58 on Tuesday, the line that has held every dip since October 1
✅ Well above the 50-day at $76.63, the top of the September base
✅ Far above the 200-day at $51.78, so the primary trend is strongly up
✅ RSI near 53, reset to neutral after the October run
Key Levels:
Resistance: $87.50 (Monday's high), then $91 to $92.50 (the October highs)
Support: $81.50 (the 20-day), then $76.60 (the 50-day and the breakout level)
The Setup: an uptrend, a pullback to the 20-day that just held, and the first full Martinez quarter reported in nine days. We buy it here with a hard line under the breakout.
🧠 SWOT & Who Should Take This Trade
Strengths: six refineries in markets short of capacity, a diesel-heavy slate, and a balance sheet that went from stretched to nearly clean in one quarter.
Weaknesses: earnings swing with the crack spread, a 1.3% dividend yield, and a stock that already tripled.
Opportunities: a big October 29 print with Martinez fully back, the winter heating-oil season, and California's permanent loss of two refineries.
Threats: a diesel price collapse on a Middle East ceasefire, a refinery outage of its own, and political pressure on California fuel prices.
Who should take this: traders who want direct exposure to the diesel squeeze with a hard stop, and who know this is a cyclical stock at a cyclical high, not a buy-and-hold.
💥 Trade of the Week: Buy the Pullback Before the Print
🟢 Stock Trade
Buy $$PBF ( ▲ 1.49% ) at $83.00 or better
🛡️ Options Play: Buy the December 18, 2026 $80/$100 Call Spread
Buy the Dec. 18, 2026 $80 Call
Sell the Dec. 18, 2026 $100 Call
Net debit: $7.60 or better ($760 per contract)
Why this structure: earnings on October 29 are a binary event, so this is defined risk only. Implied volatility is about 70%, which makes outright calls expensive, so we sell the $100 call to pay for a third of the position. December 18 is the shortest monthly expiry that clears the report by seven weeks and covers the start of the winter heating-oil season; January cost more for a higher breakeven. (Quotes as of the October 20 close - verify with live brokerage prices.)
Risk-Reward Breakdown - Dec. 18, 2026 $80/$100 Call Spread
Item | Figure |
|---|---|
Net Debit | $7.60 per share ($760 per contract) |
Max Risk | $760 per contract |
Max Reward | $12.40 per share ($1,240 per contract) |
Breakeven | $87.60 |
Return on Risk | 163% at $100 or above |
Days to Expiration | 59 |
Payoff Table - Dec. 18, 2026 $80/$100 Call Spread
PBF at Expiration | Spread Value | Profit / Loss | Return |
|---|---|---|---|
$75.00 | $0.00 | -$760 | -100% (Stop) |
$80.00 | $0.00 | -$760 | -100% |
$83.00 | $3.00 | -$460 | -61% (Entry) |
$87.60 | $7.60 | $0 | 0% (Breakeven) |
$91.17 | $11.17 | +$357 | +47% (Oct. 13 High) |
$95.00 | $15.00 | +$740 | +97% |
$100.00 | $20.00 | +$1,240 | +163% (Max Gain) |
How it works: you own the right to buy PBF at $80 and have sold someone the right to buy it from you at $100. Every dollar PBF rises between those strikes is yours, and your entire risk is the $760 you pay up front. The stock has to climb about 5.5% to break even, and it traded above that level in seven of the last nine sessions.
🛑 Risk Management Tip
On the shares, a decisive close below $75 is the hard risk line. That is under the 50-day moving average and the October 1 breakout, about 10% from our entry. Size at 1% to 2% of your account, and remember the October 29 report can gap the stock either way. On the spread your risk is capped, so buy only what you can afford to lose.
🚀 Catalysts to Watch
1. PBF Q3 Earnings (Thursday, October 29, 8:30 AM ET call) - the first full quarter with Martinez running and record diesel margins.
2. Weekly EIA Inventory Report (Wednesdays) - distillate stocks are the number the diesel market trades on.
3. Winter Heating-Oil Season (November through January) - Northeast demand lands on PBF's two East Coast refineries.
4. Final Insurance Settlement (second half of 2026) - one more Martinez fire payment, and PBF has shown what it does with cash: pay down debt.
5. Middle East and Russia Headlines - a supply shock widens the spread, a ceasefire narrows it.
Every issue ends with an options play: the legs, the premium, the payoff table. Our free eBook, Investors Love Options, explains how all of those pieces work, from basic calls and puts to multi-leg spreads. Get the free eBook
🧠 Final Thoughts
Everyone can see that oil is expensive. Fewer people look at the layer between crude and the pump, where the real money is being made this year.
$$PBF ( ▲ 1.49% ) sits in that layer with two of California's last refineries, a diesel-heavy slate, a clean balance sheet and a report in nine days that should show all of it. The stock just handed us a 10% pullback and held its 20-day on the first test.
If the stock closes below $75, the breakout failed and we step aside. If the October 29 report confirms the margin, the October highs are the first stop.
✅ Buy PBF at $83.00 or better
💸 Buy the Dec. 18, 2026 $80/$100 call spread for a $7.60 net debit
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- The Resilient Trader
Disclaimer: This publication is for educational purposes only and is not investment advice. Options involve risk and are not suitable for all investors. Do your own research and consider consulting a licensed financial professional.
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