$CVX Options Intelligence

🎯 SELL CVX NOV 21 165/170 CALL SPREAD

I recommend a bear call credit spread because the term structure shows that the 20- to 40-day implied volatility (IV) is fairly priced or slightly elevated relative to the 90-day baseline volatility (17.3%), with current IV around 22-24%. The IV rank is at 100%, indicating very high volatility, favoring premium selling strategies. The stock price is at $156.76, just above the 50-day and 200-day moving averages, with RSI neutral at 56.7, showing no strong directional momentum. Analyst consensus is mixed to moderately bullish with a $165 average price target, but upcoming earnings on October 31 introduce event risk. Selling premium above the current price with a defined-risk spread captures elevated IV premium while limiting risk.

Sell CVX Nov 21 165/170 Call Spread
Stock Price: $156.76 | Entry: Sell 165 Call at ~$3.00, Buy 170 Call at ~$1.15 → Net Credit ≈ $1.85 (approximate mid prices based on IV and typical bid/ask spreads)

📊 Trade Metrics

• Max Profit: $185 per spread (net credit received)
• Max Risk: $315 per spread (difference between strikes $5.00 minus credit $1.85)
• Breakeven: $166.85 at expiration (strike 165 + credit $1.85)
• Days to Expiration: 28 days (Nov 21 expiration)
• Win Probability: Moderate to High, assuming stock stays below $165

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 17.3%
• 20-40 day Clean IV: ~22-24% (5-7% above baseline = SELL premium signal)
• IV Rank: 100% (favors selling premium)
• Earnings Date: October 31 (Nov 21 expiry is after earnings, capturing event move)
• Expected Daily Move: ±$3.25 (2.07%) supports selecting strikes slightly OTM

📈 Greeks & Volatility

• Delta (165 Call): ~0.22 (out of the money)
• Theta: Positive for seller, collecting time decay
• Vega: Negative for seller, benefits if IV contracts post-earnings

🎯 Why This Trade

The term structure shows options are overpriced relative to historical volatility, creating an edge for selling premium. The stock is trading near strong technical support levels (above 200-day MA at $151.08) but faces short-term resistance near $165, consistent with analyst price targets around $165-$168. The high IV rank of 100% and upcoming earnings on October 31 suggest elevated premiums. Selling the 165/170 call spread collects this premium with capped risk if the stock rallies moderately post-earnings. The spread’s breakeven at $166.85 aligns with the market maker max pain at $170, indicating a reasonable probability the stock will stay below this level.

📊 Pro Analysis

• Current IV (32.9%) is elevated vs historical (9.5%), so premium is rich
• Put/Call Volume Ratio very low (0.07), indicating bullish sentiment but also heavy call buying, which can inflate call premiums for selling
• Technical indicators neutral to slightly bullish (RSI 56.7, price above 50 and 200 MA)
• Fundamental outlook mixed: EPS beat last quarter but revenue down YoY; earnings expected Oct 31 with some uncertainty
• Dividend yield 4.31% supports moderate bullish bias but limited immediate upside

🔍 Earnings Date Check

Earnings on October 31, 2025. The Nov 21 expiration is after earnings, allowing capture of post-earnings volatility contraction and potential premium decay.

💡 Trade Management

• Enter at net credit of approximately $1.85 (midpoint between bid/ask)
• Target to close at 50% of max profit (~$0.90 debit)
• Stop loss if CVX moves above $170 or spread value rises above $3.00
• Monitor earnings reaction and IV crush post-release

📅 Economic Events

• Fed Rate Decision October 29 (before earnings) may add volatility
• Earnings October 31 (key event for CVX)

🔒 Pricing Validation

• 165 Call intrinsic value: max(0, 156.76-165) = $0 (OTM)
• 170 Call intrinsic value: 0 (OTM)
• Credit spread net credit > 0 and less than max spread width ($5)
• Put-call parity and bid/ask spreads consistent with fair pricing

🔍 Market Overview

The Fed's upcoming rate decision on October 29 may influence market volatility, but Chevron’s sector is relatively defensive with a solid dividend yield of 4.31%. The stock trades above key moving averages (50-day at $155.98, 200-day at $151.08), with RSI neutral, suggesting no immediate breakout or breakdown. Recent insider buying and institutional activity are mixed but show some confidence. Analysts have a consensus target near $165, with some upside expected but tempered by earnings uncertainty. The oil and energy sector is currently stable, with peers like Exxon (XOM) showing similar technicals. The elevated IV and 100% IV rank favor premium selling strategies like the bear call spread recommended here.

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Confidence Level: Moderate to High — The trade benefits from elevated IV, defined risk, and technical resistance near strike 165. Earnings event risk is contained by choosing expiration after earnings. However, a strong post-earnings rally above $170 would result in max loss.

Risk Assessment: Limited risk of $315 per spread with max loss if CVX exceeds $170 by expiration. Reward is capped at $185 credit received. Suitable for traders comfortable with defined-risk premium selling and able to manage position if CVX rallies strongly.