Exxon Mobil Stock Rises on Analyst Bull Notes

The equity's options pits are exploding with activity in response

Deputy Editor
Jun 7, 2022 at 10:16 AM
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Exxon Mobil Corporation (NYSE:XOM) stock is moving higher today, last seen up 3.1% to trade at $101.87 -- its highest level since August 2014 -- after Evercore ISI upgraded the stock to "outperform" from "in-line." The analyst also raised its price target to $120 from $88, calling the move a "valuation call" and saying the company's shares remain cheap despite surging in 2022 alongside crude markets around the globe.

Additional analysts are weighing in on XOM as well, with Credit Suisse issuing a $13 price-target hike to $115 and lifting its estimates for Exxon Mobil's 2022 operating earnings per share (EPS), citing rising natural gas prices and strength in refining earnings. Coming into today, the brokerage bunch was split on the equity, with six recommending a "buy" or better, while eight rated it a "hold" or worse, which leaves plenty of room for additional bull notes to roll in.

On the charts, Exxon stock has held steady near roughly eight-year highs, and sits nearly 65% higher year-to-date. This marks a healthy recovery from a late-April bear gap, spurred on by worries over China's renewed pandemic-related lockdown measures. Slightly longer term, XOM is on a six-month winning streak.

The security could also benefit from a shift in sentiment in the options pits, which lean bearish at the moment. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.21 sits higher than 99% of readings from the past year, pointing to a put-bias amongst short-term options traders. Echoing this, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day put/call volume ratio that stands in the 98th percentile of its annual range. In other words, options traders are picking up puts at a quicker-than-usual clip. 

That shift could already be taking place. So far, 69,000 calls and 29,000 puts have been exchanged, which is double the intraday average. New positions are being opened at the two most popular contracts, the weekly 6/10 102- and 100-strike calls.

Options look like a good route to go for those wanting to speculate on Exxon stock's next move. The equity's Schaeffer's Volatility Index (SVI) of 32% ranks in the 30th percentile of readings from the past 12 months. This means short-term options are attractively priced right now, from a volatility standpoint. What's more, XOM has usually outperformed volatility expectations, per its Schaeffer's Volatility Scorecard (SVS) ranking of 96 out of 100.

 

 

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