Options Hot as Exxon Mobil Stock Sinks To Bottom Of Dow

XOM puts are popular today as a result

Managing Editor
Mar 7, 2018 at 2:21 PM
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Exxon Mobil (NYSE:XOM) stock is down 3.1% to trade at $73.81, the worst Dow stock today, after the oil conglomerate failed to outline a share buyback plan at today's analyst day. Instead CEO Darren Woods announced a spending plan that projects the company's earnings to more than double by 2025 if crude prices hold at current levels. Still, options traders are targeting puts.

More than 28,000 puts have traded so far -- 1.7 times what's typically seen at this point, with volume pacing in the 97th annual percentile. Leading the pack is the weekly 3/23 74-strike put, with most of the action of the buy-to-open variety, according to Trade-Alert. This indicates options traders are banking on extended downside from XOM shares in the next two weeks.

Traders have generally preferred calls over puts in the past two weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 3.60. Not only does this show that calls outnumber puts by a near four-to-one ratio, but this ratio ranks in the 90th percentile of its annual range. Should XOM stock continue to sink, it could lead to an unwinding of these bullish bets.

XOM stock fell to a three-year low of $73.69 out of the gate and has now given back nearly 12% in 2018. Earlier in February, the energy shares were hit hard by a combination of the broad-market selloff and a subpar fourth-quarter earnings report.

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