Calls Hot As Rising Oil Prices Lift Exxon Mobil Stock

The oil giant is also exploring a deal with Qatar

Patrick Martin
Apr 10, 2018 at 2:43 PM
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Exxon Mobil (NYSE:XOM) is up 3.4% to trade at $77.44, as oil prices climb above the $65 level. Exxon Mobil also made headlines after The Wall Street Journal reported the company was in talks with Qatar (subscription required) over a potential partnership. Amid the double dose of news, calls have become quite popular today in the options pits.

Diving in, roughly 65,000 XOM calls have changed hands today, two times the intraday norm and volume pacing for the 99th annual percentile. The April 77.50 call is the most popular, and there is a mixture of buy-to-open and sell-to-open activity at this strike, according to Trade-Alert. Those buying the calls expect an extended rally from the oil stock, while those writing the calls see the $77.50 level as a short-term ceiling. It's worth noting that more than 20,700 positions were open at this strike coming into today.

Looking back a few weeks, calls continues to reign. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows XOM with a 10-day call/put volume ratio of 2.74, which indicates calls have outnumbered puts by a nearly three-to-one ratio. 

Earlier today, the stock was also added to BofA-Merrill Lynch's U.S. 1 list, with the analyst in coverage believing the oil stock has "upstream portfolio leverage." Despite the bullish brokerage note today, most analysts remain skeptical. Of the 15 brokerages covering the security, 11 rate it a "hold" or "strong sell."

The flurry of good news today has Exxon Mobil stock above its 50-day moving average for the first time since Feb. 2. The equity gapped lower after its analyst day in early February, culminating in a two-year low of $72.15 on April 2.


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