$OXY Options Intelligence

🎯 SELL OXY NOV 21 42.5/40 PUT SPREAD

I recommend this bull put spread because the term structure shows that 30-day clean implied volatility (~29.5%) is slightly below the historical baseline volatility (29.8%), indicating options are fairly valued to slightly underpriced, favoring premium selling. The current IV rank is 100%, with elevated implied volatility (52.2%) driven by the upcoming earnings on November 10, 2025, which supports selling premium strategies after earnings. OXY is trading at $43.06, just below its 50-day ($45.15) and 200-day ($44.94) moving averages, with RSI neutral at 46.21, suggesting limited downside momentum. The put/call volume and OI ratios (0.65 and 0.47 respectively) are mildly bullish, and the max pain at $45 supports a range near the short strike. The stock has medium risk with daily volatility around 1.9%, and technical support near $43.95 from volume accumulation.

Trade Details:

Sell 1 OXY Nov 21 42.5 Put at approx. $1.15 (mid bid/ask)
Buy 1 OXY Nov 21 40 Put at approx. $0.35 (mid bid/ask)

Net Credit: ~$0.80 per share ($80 per spread)

Stock Price: $43.06 | Expiration: 2025-11-21 | Days to Expiration: 28

📊 Trade Metrics:

• Max Profit: $80 (net credit received)
• Max Loss: $170 (difference between strikes $2.5 - $0.80 credit)
• Breakeven at expiration: $41.70 (42.5 strike - $0.80 credit)
• Win Probability: Moderate to High (based on delta of short put ~0.40)
• Risk Level: Medium (stock near support, but below short strike)

📈 Term Structure & Volatility Analysis:

• Baseline 90-day historical vol: 29.8%
• 30-day clean IV: ~29.5% (fairly priced, slight buy signal)
• Current IV: 52.2% (elevated due to earnings anticipation)
• IV Rank: 100% (favors selling premium)
• Earnings on Nov 10, 2025, trade expiration Nov 21 is AFTER earnings to capture post-earnings volatility crush
• Put/Call Volume Ratio: 0.65 (bullish skew)
• Market Maker Max Pain: $45 (above short strike, supporting bullish bias)

📈 Greeks & Volatility:

• Short Put Delta ~ -0.40 (moderate downside risk)
• Positive Theta (net credit, benefits from time decay)
• Vega negative (benefits from IV contraction post-earnings)
• Neutral RSI (46.21) suggests no strong directional momentum

🎯 Why This Trade:

The term structure shows options are fairly priced with a slight edge to buying volatility, but the very high IV rank and elevated IV due to earnings create an opportunity to sell premium after the earnings event on Nov 10. Selling a put spread just below current price ($42.5 short put) with a $2.5 wide spread to $40 allows capture of premium while limiting downside risk. The stock shows technical support near $43.95, and the put/call volume ratios and max pain at $45 suggest limited downside. This trade benefits from time decay and expected IV contraction after earnings, with a defined risk profile.

📊 Pro Analysis:

• Current price: $43.06, below 50-day and 200-day MAs, but near support zone
• EPS $1.73, profit margin 9%, stable fundamentals
• Medium daily volatility (~1.9%) suits defined risk spread
• No major new news today; price action likely driven by technicals and earnings anticipation
• Sector peers (BRK.B, CVX, XOM) stable, energy sector strength noted recently

🔍 Earnings Date Check:

Earnings on 2025-11-10; recommended expiration 2025-11-21 is AFTER earnings, capturing post-earnings volatility drop.

💡 Trade Management:

• Entry: Place limit order to sell the 42.5 put and buy 40 put spread net credit ~ $0.80
• Target: Keep full credit; consider closing if stock falls below $41.70 or if premium decays 50%
• Stop Loss: Close if OXY breaks decisively below $40, risking max loss
• Time Stop: Close 2 days before expiration to avoid last-minute gamma risk

🔒 Pricing Validation:

• 42.5 Put intrinsic: max(0, 42.5 - 43.06) = 0 (OTM), trading near $1.15 (valid)
• 40 Put intrinsic: max(0, 40 - 43.06) = 0 (OTM), trading near $0.35 (valid)
• Spread debit/credit and put-call parity check passed

🔍 Market Overview:

The market is in a moderately bullish energy sector phase with OXY showing support near $43.95. The Fed is expected to announce rates on Oct 29, potentially impacting market volatility. The earnings event on Nov 10 is the main catalyst, with a moderate expected move of ±$1.41 (3.29%). Technicals show OXY below its 50-day and 200-day MAs, with RSI neutral, indicating a wait-and-see environment. The elevated IV and 100% IV rank support selling premium strategies like this put spread to capture time decay and volatility contraction. The risk is medium given OXY’s price near support but below moving averages and recent sector strength.

Confidence Level: Moderate to High
Risk Assessment: Medium risk, defined maximum loss with favorable risk/reward ratio and technical support near strike.

This trade balances premium collection with limited downside risk, ideal for current market conditions and earnings timing.