Unusual Options Activity: ExxonMobil (XOM)

Shares of energy giant ExxonMobil (XOM) have traded about in line with the energy sector in the past few months. First, shares saw a huge rise on rising oil prices, then were hit in recent weeks on the latest OPEC news. One trader sees the starting recovery in shares to continue.

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  • That’s based on the August $64 calls. Expiring in 18 days, over 18,720 contracts traded against an open interest of 143, for a 131-fold explosion in volume.

    The buyer of the calls paid about $0.20 to make the trade, or a full $20 per contract.

    Energy stocks were one of the top performers in the first half of the year, and shares of Exxon hit a peak just under $65 per share. That’s as the company is still coming off big losses and writedowns in oil assets from 2020.

    Action to take: Shares yield about 6 percent right now, so even in a slow recovery, buyers of shares today will likely benefit over the long haul.

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  • For traders, the option makes some sense, as shares appear to be trying to move higher. However, an immediate return to 52-week highs seems unrealistic in the timeframe for these options. Given their low price, they’re likely capable of a high double-digit return, but traders should look to exit before expiration.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.