$KMI Options Intelligence

🎯 SELL KMI JAN 16 2026 27/29 CALL CREDIT SPREAD

I recommend this trade because KMI’s options are significantly overpriced (IV Rank 100%, Clean IV 26.5% vs 17.7% baseline), technicals are neutral (RSI 52.92, price above 20MA but below 50/200MA), and analysts are bullish with a $31.71 average price target. The recent insider buying (Richard Kinder +1M shares) and stable sector sentiment support a range-bound outlook, making premium selling ideal.

Sell KMI Jan 16 2026 27/29 Call Credit Spread
Stock Price: $26.93 | Entry: $0.80 credit

📊 Trade Metrics

• Risk: $1.20 per spread ($120 total)
• Reward: $0.80 per spread ($80 total)
• Breakeven: $27.80
• Max Loss: $120 if KMI > $29 at expiry
• Max Profit: $80 if KMI < $27 at expiry
• Win Rate: 72% (based on delta)
• Days to Expiration: 65

📈 Term Structure & Volatility Analysis

• Baseline 90-day Vol: 17.7%
• 47-day Clean IV: 26.5% (8.8% above baseline = SELL signal)
• Market IV: 27.6% (very high vs historical 16.6%)
• Earnings Multiplier: 2.95x (high, but earnings is after expiry)
• Calendar Opportunity: No (adjacent expiries show <5% IV difference)
• Recommendation: SELL premium (overpriced options)

📈 Greeks & Volatility

• Net Delta: +0.15 (slightly bullish)
• Theta: +$0.08/day (benefits from time decay)
• Vega: +$0.12 (profits if IV drops)
• Current IV: 27.6% (elevated vs 16.6% historical)
• IV Rank: 100% (extremely high)
• Put/Call Ratio: 0.46 (very bullish sentiment)

🎯 Why This Trade

The term structure shows KMI options are 8.8% above historical volatility, creating a statistical edge for selling premium. Recent insider buying (Richard Kinder +1M shares) and analyst upgrades (BMO $32, Morgan Stanley $30, Stifel $30) suggest strong support near $25.96 and upside potential to $30. KMI’s RSI is neutral (52.92), price is above 20MA ($26.56) but below 50/200MA ($27.17/$27.29), and sector peers (MPLX, WMB, ET, EPD) are stable. The $27/29 call spread targets the upper end of the expected move, with a 72% win rate and defined risk. The $0.80 credit is well above intrinsic value (OTM spread).

📊 Pro Analysis

• Current IV: 27.6% vs Historical: 16.6%
• IV Rank: 100% (extremely high)
• Expected Daily Move: ±$0.51 (1.90%)
• Put/Call Ratio: 0.46 (very bullish)
• Market Maker Max Pain: $30
• Technical: RSI 52.92 (neutral), price above 20MA, below 50/200MA
• Unusual Activity: Heavy call buying (Put/Call Ratio 0.46)

🔍 Earnings Date Check

• Next Earnings: 2026-01-28
• Recommended Expiration: 2026-01-16 (BEFORE earnings)
• Validation: ❌ WARNING: Expires BEFORE earnings. Do NOT use for earnings plays.

💡 Trade Management

• Entry: Place limit order at $0.80 (mid of $0.75/$0.85)
• Target: Close at $0.40 (50% profit)
• Stop: Exit if KMI breaks above $28.50
• Time Stop: Close 2 days before expiration

📅 Economic Events: CPI 2025-11-13, Fed Rate Decision 2025-12-10

🔒 Pricing Validation

• 27 Call intrinsic value: $0 (OTM), trading at $0.80 ✅
• 29 Call intrinsic value: $0 (OTM), trading at $0.00 ✅
• Put-Call Parity Check: C - P = S - K holds within tolerance ✅
• Spread pricing verified: Credit spread with proper bid/ask alignment ✅

Confidence Level: 85%
• High IV (100% rank) and strong technicals support premium selling.
• Insider buying and analyst upgrades add confidence.
• Risk is defined and limited to $120 per spread.

Risk Assessment:
• Max Loss: $120 per spread if KMI > $29 at expiry.
• Max Profit: $80 per spread if KMI < $27 at expiry.
• Probability of Profit: 72% (based on delta).
• Theta decay: +$0.08/day, benefits from time decay.
• Vega: +$0.12, profits if IV drops.

This trade is ideal for collecting premium in a high-IV environment with defined risk and a high probability of success.