Exxon Mobil Corporation (XOM) Rebound Lures Option Bulls

Exxon Mobil Corporation hit a 14-month low earlier, but has since recovered

by

Published on Dec 16, 2014 at 2:03 PM
Updated on Apr 20, 2015 at 5:32 PM

After earlier touching an annual low of $86.19, Exxon Mobil Corporation (NYSE:XOM) was last seen 0.4% above breakeven at $87.24. This wild price movement -- which is reflective of today's broad-market volatility -- has brought a number of options traders to the table. In fact, calls are being exchanged at double the usual intraday rate, and the stock's 30-day at-the-money implied volatility has risen 2.5% to 29.2%, suggesting short-term strikes are in demand.

Taking the top spot is XOM's January 2015 92.50-strike call, where 18,339 contracts -- including a sweep of 15,000 -- have changed hands. Based on a number of factors, it appears traders are placing fresh bullish bets, anticipating the shares will rally past $92.50 by January options expiration.

This preference for call buying is a break from the recent norm, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the last 10 days, traders have bought to open nearly two XOM puts for every call, resulting in a put/call volume ratio of 1.63 -- in the 86th percentile of its annual range.

This prevailing skepticism isn't surprising, given Exxon Mobil Corporation's (NYSE:XOM) longer-term struggles. Year-to-date, the equity has shed about 14% of its value.


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