2 Oil Stocks Making Volatile Post-Earnings Moves

Options traders have been call-heavy toward CVX and XOM

Managing Editor
Apr 27, 2018 at 11:00 AM
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Earnings season is powering forward, with the latest batch of reports that came in early this morning including a pair of blue-chip oil concerns. Specifically, Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) reported earnings before today's opening bell, but the energy stocks are trading in opposite directions following the results.

CVX Options Bulls Cheer Earnings Reaction

Shares of Chevron are 1.6% higher at $126.16, after the oil company reported first-quarter earnings of $1.90 per share that far surpassed analyst expectations. Chevron also reported quarterly revenue of $37.76 billion -- up around 13% year-over-year.

CVX recently began its recovery after a rapid pullback from its mid-January highs. Since hitting a near-term low near $110 earlier this month, Chevron stock is up more than 14%, and is pacing toward its fifth straight weekly gain -- its longest weekly win streak since September.

Options traders have been quite bullish toward the stock ahead of earnings, too. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows CVX with a 10-day call/put volume ratio of 2.30, ranking in the 81st percentile of its annual range. This suggests calls have been purchased over puts at a faster-than-usual clip over the past two weeks.

Analysts are also upbeat toward the oil concern. Currently, 14 of the 17 brokerage firms keeping tabs on Chevron sport "strong buy" recommendations, with not one "sell" on the books.

Exxon Stock Plunges on Earnings Miss

Exxon Mobil, on the other hand, has not been so lucky in today's trading, with the stock last seen down 3.5% at $78.00. This retreat comes after Exxon reported first-quarter earnings of $1.09 that missed estimates, as chemical and refining weakness overshadowed surging oil prices.

Today's drop comes one day after the Dow stock closed north of its 120- and 200-day trendlines for the first time since an early February bear gap. And while the shares are back below these moving averages -- and down 6.7% year-to-date -- this downside appears to be finding a foothold near $76.50, which is a 50% Fibonacci retracement of XOM's rally off its April 2 two-year low of $72.16 to yesterday's intraday peak near $81.

Short-term options traders were more call-heavy than usual ahead of earnings. Schaeffer's put/call open interest ratio (SOIR) stands at 0.55, and ranks in the 24th percentile of its annual range.

Drilling down, the May and June 80 calls are home to a heavy accumulation of open interest, with roughly 36,500 contracts collectively outstanding. The major options exchanges are showing a mix of buy- and sell-to-open activity at both strikes, with those purchasing the calls betting on a round-number breakout, and those writing the options setting a short-term ceiling for the shares.


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