Post-Earnings Options Traders Blast Chevron Corporation, Exxon Mobil Corporation

Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) are taking differing post-earnings paths

Oct 28, 2016 at 11:31 AM
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The biggest week of third-quarter earning season wrapped up this morning with quarterly results from oil majors Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM). While CVX stock is getting a boost in the wake of its firm's results -- and is handily the top advancer on the Dow -- fellow energy name XOM isn't faring quite as well. Meanwhile, options traders are blasting both Dow stocks, with volume on CVX and XOM accelerated in midday action.

CVX options, for instance, are crossing at three times what's typically seen at this point in the day, with more than 40,000 contracts on the tape at last check. While put traders appear to be closing their weekly 10/28 100- and 101-strike puts -- the stock's two most active options -- ahead of tonight's expiration, option bears are purchasing new positions at the weekly 11/4 99.50-strike put, hoping for a quick retreat south of the strike through next Friday's close, when the weekly series expires.

Elsewhere, call players are targeting the weekly 11/4 106-strike, weekly 11/11 105-strike, and November 107 calls, where a fresh batch of positions are being initiated. It looks like some of the activity at the latter two strikes are of the sell-to-open kind, meaning traders are setting a short-term ceiling for the oil stock at $105 and $107, respectively.

At last check, shares of Chevron Corporation were up 3.8% at $103.72, after the company posted stronger-than-expected third-quarter earnings and upped its quarterly dividend. While this positive price action is reflective of CVX stock's longer-term trend -- the shares are up nearly 38% from their late January lows near $75 -- the $104 level has served as a stiff ceiling in recent months. Additionally, today's potential front-month call writers could be hoping CVX shares stall out near $107 -- home to their mid-July annual high.

Elsewhere, XOM options are flying off the shelves at two times the average intraday pace, with roughly 46,000 contracts traded at last check versus the expected 17,000. Puts have the definitive lead over calls, with 31,000 of the former and 15,000 of the latter on the tape. Despite today's post-earnings slip, a number of speculators are targeting support at $82.50 over the next two months, with possible sell-to-open activity detected at XOM's December 82.50 put.

While the shares of Exxon Mobil Corporation haven't traded south of this strike since late September, they were last seen down 1% at $86.08 -- on track to close south of their recently supportive 200-day moving average for the first time since Sept. 27. Weighing on the security is the firm's 38% drop in quarterly profit, although the results still beat the consensus estimate. Longer term, XOM stock has added 20% since hitting an annual low of $71.55 in late January, but has more recently run out of steam in the $87.50-$88.50 region, an area that served as support in the second quarter of this year.

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