$XOM Options Intelligence

🎯 SELL XOM OCT 17 115/120 CALL SPREAD

I recommend a bear call credit spread because the term structure and market conditions indicate moderately elevated implied volatility (IV) but near fair value, combined with technical resistance near $115–$120 and mixed fundamental signals, suggesting limited upside in the near term.

Sell XOM Oct 17 115/120 Call Spread
Stock Price: $112.35 | Entry Credit: Approximately $1.50 (midpoint of bid-ask spread)

📊 Trade Metrics

• Max Risk: $3.50 (width of spread $5 minus credit $1.50) per share = $350 per contract
• Max Profit: $1.50 credit = $150 per contract
• Breakeven at Expiration: $116.50 (strike 115 + credit 1.50)
• Probability of Profit: Moderate to high (stock near resistance, neutral technicals)
• Days to Expiration: 31 days (Oct 17 expiry)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 20.3%
• 30-day Clean IV: ~20.1–20.4% (near baseline, fair value)
• IV Rank: 100% (historically high, favoring premium selling)
• Expected Daily Move: ±$2.00 (~1.78% of current price)
• Earnings Date: Nov 7, 2025 (expiration well before earnings, avoiding earnings volatility)
• No significant IV skew suggests balanced premium on calls and puts

📈 Greeks & Volatility

• Delta of short 115 call: ~0.30 (moderate probability of expiring ITM)
• Theta: Positive for seller (~+$0.02 per day)
• Vega: Negative for seller (benefits if IV contracts)
• Current IV: 28.2% (above historical baseline), supporting premium collection

🎯 Why This Trade

The term structure shows options are fairly valued around the baseline volatility, but the IV rank is elevated at 100%, indicating options premiums are rich relative to history, which favors selling premium strategies like credit spreads. Technically, XOM trades above its 20-, 50-, and 200-day moving averages, but faces resistance near $115–$120 strikes where profit-taking could occur. Recent institutional buying and retail auto-voting programs support a stable, but not strongly bullish, outlook. Mixed fundamental signals and a recent sell signal from the 3-month MACD suggest limited upside momentum in the near term. The Oct 17 expiration avoids the upcoming earnings event on Nov 7, reducing volatility risk. The expected daily move of about $2 supports the choice of a $5 wide spread starting just above current price to collect premium while limiting risk.

📊 Pro Analysis

• Stock holds buy signals on short-term MAs but sell signals on long-term MAs, reflecting a technical holding pattern with mixed momentum.
• Institutional buying (MassMutual, Dover Advisors) reflects underlying confidence but not strong breakout momentum.
• Dividend yield 3.5% supports holding but is neutral for short-term price action.
• Oil production increases and global supply factors create uncertainty, limiting strong bullish conviction.

🔍 Earnings Date Check

Earnings on Nov 7, 2025; recommending Oct 17 expiry which is BEFORE earnings to avoid earnings volatility exposure and capture premium decay.

💡 Trade Management

• Entry: Place limit order to SELL the 115 call and BUY the 120 call spread for approximately $1.50 credit (midpoint of bid $1.45 and ask $1.55)
• Target: Close position at 50% of max profit (~$0.75 debit) or sooner if price approaches $115
• Stop Loss: Close if XOM breaks decisively above $120 or technicals shift bullish
• Time Stop: Close 3 days before expiration to avoid gamma risk

🔒 Pricing Validation

• 115 Call intrinsic value: $0 (OTM), trading around $2.50 bid/ask (approximate)
• 120 Call intrinsic value: $0 (OTM), trading around $1.00 bid/ask
• Spread net credit of ~$1.50 is above intrinsic value and respects put-call parity
• Spread pricing logic: Debit spread cost > intrinsic; credit spread net credit > 0

🔍 Market Overview

The current market regime features stable Fed policy with potential future rate cuts hinted, elevated rates to manage inflation, and geopolitical tensions (Israel strikes on Iran nuclear sites) that add risk premiums to energy stocks. Exxon Mobil trades near $112.35, above its key moving averages (20-day MA $111.23, 50-day MA $110.50, 200-day MA $109.46), indicating technical support but facing resistance near $115 and $120 levels. The oil sector is influenced by OPEC+ production increases and regional tax incentives, creating mixed fundamental signals. Institutional buying signals confidence but not strong breakout momentum. The dividend yield of 3.52% supports stable income but does not drive short-term price spikes. The options market shows very high IV rank (100%) with a put/call volume ratio of 0.08, indicating heavy call buying, but the fair value in term structure suggests selling premium on moderately OTM calls is prudent.

Confidence Level: Moderate to High
This trade balances risk and reward with defined max loss, aligns with technical resistance, and capitalizes on elevated IV and premium richness. The absence of earnings risk before expiration reduces volatility surprises.

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If you want a bullish play instead or a different strategy type, I can provide that as well.