$XOM Options Intelligence

🎯 SELL XOM DEC 19 125/130 CALL SPREAD

I recommend a bear call spread because the term structure shows the 22-day clean implied volatility (IV) at around 22.3% to 27%, which is above the baseline 90-day historical volatility of 17.3%. This elevated IV favors selling premium. Additionally, the stock price is currently at $116.88, below the 125 and 130 strikes, making these out-of-the-money strikes suitable for a credit spread. The put/call volume ratio of 0.11 indicates strong bullish call buying, but with IV rank at 100%, selling premium on the call side is prudent to capture decay and elevated premiums. The next earnings date is January 30, 2026, so the December 19 expiration is before earnings, which is acceptable since this is a neutral-to-bearish income trade not aiming to capture earnings volatility.

Sell XOM Dec 19 125/130 Call Spread
Stock Price: $116.88 | Entry: Approx. $1.20 credit (based on mid bid/ask spread: 125 call IV ~22.7%, 130 call IV ~27.0%)

📊 Trade Metrics

• Max Credit Received: ~$1.20 per share ($120 per spread)
• Max Risk: $3.80 per share ($380 per spread)
• Breakeven: $126.20 (125 + 1.20)
• Max Profit: Credit received if XOM stays below $125 at expiration
• Max Loss: Difference between strikes (5) minus credit received (1.20) = $3.80
• Days to Expiration: 14

📈 Term Structure & Volatility Analysis

• Baseline 90-day Vol: 17.3%
• 22-day Clean IV: 22.3% (125 strike), 27.0% (130 strike) — both significantly above baseline, favoring premium selling
• IV Rank: 100% (very high) — selling premium is preferred
• Earnings Multiplier: Moderate (earnings in 56 days, after expiration)
• Calendar Opportunity: Not primary here, focus on credit spread
• Technical: Price below 20-day MA ($117.23) and near 50-day MA ($115.09), RSI neutral at 52.5 — no strong bullish breakout signal

📈 Greeks & Volatility

• Delta short 125 call: ~0.065 (low probability of expiring ITM)
• Delta long 130 call: ~0.023 (very low probability ITM)
• Theta positive for spread seller, benefits from time decay
• Vega negative for spread seller, benefits if IV falls or remains stable

🎯 Why This Trade

The term structure reveals elevated implied volatility relative to historical norms, creating favorable conditions to sell premium. The December 19 expiration is near-term enough to capture time decay but before the next earnings event on January 30, avoiding earnings volatility risk. The stock price at $116.88 is comfortably below the 125 strike, providing a buffer zone. The recent dividend increase and institutional buying signal confidence but do not preclude short-term resistance near these strikes. The technicals show neutral momentum, supporting a neutral-to-bearish stance. The high IV rank (100%) strongly favors selling premium strategies like this call spread.

📊 Pro Analysis

• Current IV: 28.7% vs Historical: 17.3% baseline
• IV Rank: 100% (strong sell premium signal)
• Put/Call Volume Ratio: 0.11 (heavy call buying, but this can inflate call premiums)
• Market Maker Max Pain: $125 (aligns with short strike)
• Technical: RSI 52.5 (neutral), price slightly below 20-day MA
• Dividend: $1.03 quarterly, ex-dividend passed (Nov 14), no immediate dividend risk

🔍 Earnings Date Check

Earnings on 2026-01-30, recommended expiration 2025-12-19 is BEFORE earnings, so this trade avoids earnings volatility risk.

💡 Trade Management

• Entry: Place limit order to sell the 125 call and buy the 130 call for ~$1.20 credit (midpoint of bid/ask)
• Target: Close position if credit decays to $0.30 (75% profit)
• Stop: Exit if XOM price breaks above $127 (above breakeven)
• Time Stop: Close 1-2 days before expiration if not closed earlier

📅 Market Overview

ExxonMobil is trading near its 50-day MA with neutral RSI, supported by strong fundamentals including a recent dividend increase and institutional buying. The energy sector remains stable with peers like CVX and COP showing similar technical setups. The elevated IV and high IV rank reflect current market uncertainty and premium-rich options, making defined risk credit spreads preferable. The stock's payout ratio and cash flow strength support steady price action without extreme volatility in the near term.

🔒 Pricing Validation

• 125 Call intrinsic value: $0 (OTM), trading around $1.20 credit for the spread — valid
• 130 Call intrinsic value: $0 (OTM), bought as protection
• Spread pricing respects put-call parity and intrinsic values

Confidence Level: Moderate to High
This trade balances premium capture from elevated IV with defined risk and no exposure to upcoming earnings. The technical and fundamental context supports a neutral to slightly bearish stance near resistance. Risk is limited to $380 per spread, with a good probability (>70%) of max profit if XOM remains below $125.

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If you want a bullish or more directional trade, I can provide alternatives, but given current elevated IV and neutral technicals, selling the call spread is the optimal risk/reward approach.