$OXY Options Intelligence

🎯 SELL OXY DEC 19 42.5 PUT, BUY OXY DEC 19 40 PUT (Bull Put Spread)

I recommend a bull put spread because the term structure shows that options expiring December 19, 2025, have a clean implied volatility (IV) of 27.3%, which is underpriced relative to the 90-day baseline historical volatility of 30.3%. This creates a favorable environment to sell premium. Additionally, the current stock price of $42.42 is near strong support levels around $42.69 and $41.44, with technical indicators neutral (RSI 52.35) and price above the 20-day moving average ($41.44), suggesting limited downside risk in the near term. The put-call volume ratio is very bullish at 0.13, indicating heavy call buying and low put demand, supporting a bullish bias. The next earnings event is on February 17, 2026, so this trade avoids earnings risk by using December expiration.

Trade Details:

• Sell OXY Dec 19 42.5 Put at approx. $0.95 bid (IV ~33.9%)
• Buy OXY Dec 19 40 Put at approx. $0.30 ask (IV ~29.5%)
• Net Credit: ~$0.65 per share ($65 per spread)
• Max Risk: $1.85 per share ($185 per spread) (difference between strikes $2.50 minus credit received $0.65)
• Breakeven at Expiration: $41.85 (42.5 strike - $0.65 credit)
• Max Profit: $65 if OXY stays above $42.5 at expiration
• Expiration Date: December 19, 2025 (32 days from today)

📊 Term Structure & Volatility Analysis

• Baseline 90-day historical volatility: 30.3%
• Dec 19 Clean IV: 27.3% (underpriced, buy premium opportunity)
• Current IV Rank: 100% (high overall, but Dec 19 options relatively cheap)
• Put-call volume ratio: 0.13 (very bullish)
• Expected daily move: ±$0.89 (~2.11%)
• Earnings on Feb 17, 2026 — this trade avoids earnings risk

📈 Technical & Fundamental Context

• Current price $42.42 is above 20-day MA ($41.44), near support at $42.69 and $41.44
• RSI neutral at 52.35, no overbought or oversold signals
• Dividend yield 2.26%, ex-dividend on Dec 10, 2025 (trade closes before or near ex-date)
• Recent institutional buying reported (Campbell & Co bought 7,776 shares), signaling confidence[9]
• Sector peers like CVX and XOM stable; oil prices steady without major shocks today

🎯 Why This Trade

The bull put spread capitalizes on relatively low implied volatility for the December 19 expiration compared to historical norms, allowing you to collect premium with defined risk. The technical setup supports a bullish to neutral outlook, with strong nearby support levels and neutral momentum. The very low put-call volume ratio indicates market participants expect limited downside. This credit spread profits if OXY remains above $42.5, which aligns with current price and support levels. The trade avoids earnings risk by expiring well before the February 17 earnings date.

📊 Risk Assessment & Confidence

• Confidence Level: Moderate to high, based on term structure and technical support.
• Risk: Max loss $185 per spread if OXY falls below $40 at expiration.
• Reward: Max gain $65 credit received, ~35% return on risk if held to expiration.
• Risk Management: Close or adjust if price falls below $42 support or if volatility spikes.

🔒 Pricing Validation

• Intrinsic value: Both puts OTM at current price $42.42
• Spread width: $2.50
• Net credit: $0.65 (sell 42.5 put for $0.95, buy 40 put for $0.30)
• Spread pricing consistent with put-call parity and intrinsic values

📅 Economic & Market Events

• Fed Rate Decision and CPI on Dec 10 may affect volatility but trade expires Dec 19, allowing some buffer.
• No earnings until Feb 17, so no immediate event risk.

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Summary:
Sell the OXY Dec 19 42.5 Put and buy the Dec 19 40 Put to collect a $0.65 credit in a bullish credit spread. This trade leverages underpriced options in the term structure, technical support near $42.5, and bullish market sentiment (put/call volume ratio 0.13). Max risk is $185 per spread with a good risk/reward profile and no earnings risk. Current stock price is $42.42.