Exxon Stock Sees Wild Pre-Earnings Put Trading

The equity has a history of mixed post-earnings moves

Deputy Editor
Apr 25, 2022 at 1:39 PM
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The shares of Exxon Mobil Corporation (NYSE:XOM) are trading well below breakeven today, last seen down 6.1% to trade at $79.96 as oil stocks take a hit by falling crude prices amid renewed Covid-related lockdown measures in Asia. In addition, Greenpeace activists today blocked one of Exxon's oil tankers from delivering Russian oil to Norway.

All of this comes ahead of the company's first-quarter earnings report, which is due out before the open on Friday, April 29. Below, we'll dig into Exxon stock's current technical setup, as well as some past post-earnings performances, and what's happening in the options pits today.

On the charts, XOM continues to pullback from its March 8, multi-year high of $91.51. Today's negative price actions puts the equity at risk of closing below $80, which was a level that caught two pullbacks that followed the aforementioned highs. Further, the 40-day moving average is once again acting as a trendline of resistance. Year-to-date, Exxon stock is still 31.1% higher.

XOM Chart April 25

The stock has a mixed history of earnings reactions. Based on next-day moves from the last two years, XOM has been positive after four of the past eight reports, including after its last two trips to the earnings confessional. Exxon stock averaged a single-session post earnings swing of 2.8%, regardless of direction. This time around, the options pits are pricing in a move more of more than double that average.

Put traders, meanwhile, are blasting the shares in response to the negative news occurring today. While calls outpace puts on an overall basis, more than 45,000 of the latter have been exchanged already so far today, which is volume running at double the intraday average. The May 90 call is the most popular, while new positions are being opened at the second and third most popular contracts, the May 78 put and the weekly 4/29 77-strike put, respectively.

This penchant for bearish bets is the norm. In fact, XOM's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 80% of readings from the last 12 months. This indicates puts were more popular than usual in the last two weeks.

Now looks like a solid opportunity to bet on the stock's next move with options, too. Exxon stock's Schaeffer's Volatility Scorecard (SVS) sits at 86 out of 100, meaning the equity has exceeded option traders' volatility expectations during the past year.


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