At first glance, the concept of betting on the long side for upstream oil specialist Kosmos Energy (KOS) seems risky, in large part because of the Federal Reserve. With policymakers again resuming interest rate hikes to combat stubbornly elevated inflation, this framework doesn’t bode well for commoditized industries. So, while KOS stock has been up this year, the price action has been incredibly choppy.
Still, options traders apparently see upside opportunity with KOS stock, with Kosmos drawing significant attention during Monday trading. Fundamentally, the bullishness isn’t entirely unjustified. While monetary policy headwinds pose significant challenges, nuances in the consumer economy may help undergird optimism. In addition, with so many investors walking away from the hydrocarbon space, KOS appears undervalued.
