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Exxon Mobil Corporation (XOM) Bears Target a Pullback

XOM touched a record high yesterday, but is up only 15% year-to-date

by 12/19/2013 10:31 AM
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Option Brief: Exxon Mobil Corporation (NYSE:XOM) options volume finished at roughly twice its daily average yesterday, with trading split fairly evenly between calls and puts. Most active was XOM's April 2014 92.50-strike put, where 21,645 contracts crossed the tape.

Over half the contracts at the out-of-the-money strike changed hands at the ask price, suggesting they were purchased. Also, open interest soared by north of 19,700 contracts overnight, conveying buy-to-open activity -- a theory confirmed by data from the International Securities Exchange (ISE).

With XOM hovering at $99.51, Wednesday's put buyers need the shares to drop at least 7% to land below $92.50 by April 2014 options expiration. If the downward move fails to materialize, however, the most the traders will lose is the entirety of the initial premium paid.

Technically, Exxon Mobil Corporation (NYSE:XOM) gapped nearly 3% higher yesterday and touched an all-time intraday high of $99.95. In fact, the stock has gained nearly 6% since Nov. 14, when Warren Buffett revealed that Berkshire Hathaway Inc. (NYSE:BRK.A) had established a more than 40-million-share stake in XOM. However, for the year, the energy name is up only 15%, compared to a nearly 27% advance on the S&P 500 Index (SPX).


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