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Option Brief: Exxon Mobil Corporation's (NYSE:XOM) option traders have shaken off the oil concern's 18% drop in profit for the third quarter, and are picking up call contracts at a rate nearly triple the intraday norm. With XOM's shares up 1.9% to trade at $90.50 this afternoon, it seems the call players are betting on continued upside in the near term.
Specifically, speculators are checking out the now in-the-money November 90 call, which has been the main attraction in XOM's options pits today. At this strike, about three-fourths of the 15,700 contracts traded -- including a block of 4,823 -- went off at the ask price. This, plus data from the International Securities Exchange (ISE), suggests that a large portion of the contracts have been bought to open.
In order for today's call buyers to profit from their plays, XOM has to step just a fraction to the north, in order to finish atop the breakeven price of $90.67 (strike plus the volume-weighted average price of $0.67) by front-month options expiration. As of now, the call has a nearly 60% chance of being in the money at the close on Nov. 15, as delta currently stands at 0.59.
Technically speaking, Exxon Mobil Corporation (NYSE:XOM) is on track to finish the day in the green. As such, the stock is defying recent history, as it has not ticked higher the day after an earnings report in four of the past seven quarters. Of note, last year, XOM did tack on 0.5% in the subsequent session, but one week later had logged a post-earnings deficit of 3.3%. Should the equity continue to see gains over the next four trading days, it will be the first time in five quarters XOM has done so following its quarterly announcement.