Blue-Chip Oil Stock Facing Technical Headwinds

The stock has failed to recapture its 200-day trendline

Mar 14, 2023 at 11:34 AM

The shares of Chevron Corporation (NYSE:CVX) are in the midst of a bear flag breakdown on the charts. The stock turned lower after filling its mid-February bear gap, failing to recapture its 200-day trendline, and is also seeing pressure at its descending 20-day moving average. In addition, CVX is pushing below its -10% year-to-date level, peak put open interest, and its one-year volume point of control (VPOC).

Though optimism in the options pits has started to roll over, there is still plenty to unwind, which could provide headwinds. CVX’s 50-day call/put volume ratio of 1.97 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 94th percentile of its annual range.

Now looks like a good time to weigh in with options, too. Chevron stock is seeing attractively priced premiums, per its Schaeffer’s Volatility Index (SVI) of 28%, which ranks in the 24th percentile of its 12-month range.

Our recommended put has a leverage ratio of 8.5, and will double in value on a 10.1% drop in the underlying shares.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CVX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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