$XOM Options Intelligence

🎯 SELL XOM DEC 19 125/130 CALL SPREAD

I recommend a bear call spread because the term structure for XOM shows that implied volatility (IV) is currently elevated relative to historical norms, with a 26.2% average IV and a high IV rank of 100%, indicating premium is expensive and favors selling strategies. Additionally, the stock price at $119.13 is below the $125 strike, and technicals show resistance near $119.64, suggesting limited upside in the near term. The upcoming earnings on January 30, 2026, are well after this expiration, so this trade avoids earnings risk. Recent market intelligence highlights Exxon’s cost-cutting and regulatory challenges, which may cap near-term upside, supporting a neutral-to-bearish short call spread stance.

Sell XOM Dec 19 125/130 Call Spread
Stock Price: $119.13 | Entry: Sell Dec 19 125 Call (Bid ~ $3.20), Buy Dec 19 130 Call (Ask ~ $1.20)
Net Credit: Approximately $2.00 per share ($200 per contract)

📊 Trade Metrics

• Max Profit: $200 (net credit received) if XOM ≤ $125 at expiration
• Max Risk: $300 (difference between strikes $5.00 - $2.00 credit)
• Breakeven: $127.00 (125 + 2.00)
• Probability of Profit: High, as resistance is near $119.64 and stock is below $125
• Days to Expiration: 38 days (Dec 19)
• Theta: Positive for seller, benefits from time decay
• Vega: Negative, benefits if IV contracts from current elevated levels

📈 Term Structure & Volatility Analysis

• Baseline 90-day Historical Volatility: ~17.9%
• Current Average IV: 26.2% (well above baseline, indicating expensive premium)
• IV Rank: 100% (strong sell premium signal)
• Clean IV for Dec 19 options: ~20.5% (still above baseline)
• Earnings Date: January 30, 2026 (trade expires well before earnings)
• Calendar Opportunity: No significant calendar spread edge here, best to sell premium now

📈 Greeks & Volatility

• Delta of Dec 19 125 Call: ~0.24 (out-of-the-money call, moderate risk)
• Delta of Dec 19 130 Call: ~0.10 (further out-of-the-money, limited risk)
• Positive Theta exposure helps profit from time decay as expiration approaches
• Current IV elevated but expected to decline into expiration, benefiting the seller

🎯 Why This Trade

The elevated IV and 100% IV rank signal that options are overpriced relative to historical norms, making selling premium attractive. XOM’s recent price action shows resistance near $119.64, with a 1-day standard deviation range confirming limited upside in the short term. The company’s announcement of a 2,000-job cut and regulatory challenges in California add caution to bullish sentiment. The Dec 19 expiration avoids earnings risk, allowing time decay to work in favor of the seller. This spread caps risk and collects a solid credit in a neutral-to-bearish environment, aligning with the current market conditions and technical resistance.

📊 Pro Analysis

• Stock is trading slightly below its 20-day MA ($115.06) but above 50-day and 200-day MAs, showing mixed technicals with resistance near $119.64
• Dividend yield of 3.36% supports some underlying value but limited short-term upside
• Sector peers like CVX and COP are also facing supply concerns, limiting energy sector rallies
• Institutional buying is mixed, with recent purchases by Mitsubishi UFJ Trust & Banking and Renasant Bank but overall cautious sentiment
• Expected daily move ±$1.97 supports a tight range, making a call spread above $125 safer

🔍 Earnings Date Check

• Earnings on January 30, 2026
• Recommended expiration December 19, 2025, which is well BEFORE earnings, avoiding earnings volatility risk

💡 Trade Management

• Entry: Place limit order to SELL Dec 19 125 Call at $3.20 and BUY Dec 19 130 Call at $1.20 for a net credit of $2.00
• Target: Close position if credit drops to $0.50 or less (75% profit)
• Stop: Buy back calls if XOM rises above $127 (breakeven)
• Time Stop: Close trade 3-5 days before expiration to avoid gamma risk

🔒 Pricing Validation

• Dec 19 125 Call intrinsic value: $0 (OTM)
• Dec 19 130 Call intrinsic value: $0 (OTM)
• Spread max loss = $5.00 - $2.00 credit = $3.00 (valid pricing)
• Put-call parity and intrinsic values respected

🔍 Market Overview

The broader market is cautious amid mixed economic signals and slowing growth concerns. Energy stocks like XOM are facing supply oversupply worries but remain supported by strong fundamentals such as a $6.88 EPS and $31.11B net income. Technical indicators show XOM trading above key moving averages but facing resistance near $119.64. The dividend yield of 3.36% offers income support but price appreciation is capped short term. The recent job cuts and regulatory challenges create uncertainty, favoring defined-risk bearish premium selling strategies. The elevated implied volatility and high IV rank reinforce selling premium over buying.

---

Confidence Level: Moderate to High
Risk Assessment: Defined risk of $300 per contract with max profit of $200. The risk is capped and manageable given the technical resistance and elevated implied volatility. The trade benefits from time decay and potential IV contraction.

Current stock price: $119.13.