Dow component Exxon Mobile (XOM) lost 42 cents $64.54 and afternoon trades include a Jan11 65- 75 call spread, apparently bought at $3.40, 14500X, on PHLX. The action comes ahead of earnings, Monday morning.
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Exxon Mobil Corp (XOM) $64.43 -0.82%
Posted on January 29th, 2010 3:50 pm
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3 users commented on " Exxon Mobil Corp (XOM) $64.43 -0.82% "
Follow-up comment rss or Leave a TrackbackHearing that an analyst is recommending the Feb 65 buy-write ahead of earnings.
So the guy that did the call spread is bullish and the analyst recommending the buy-write is neutral to bearish thinking that it won’t go over 65 by feb expiration.
I’m generally not a fan of buy-writes since you have to hold the actual shares. It’s a good strategy for IRAs and other accounts that don’t let you sell naked options.
From what I understand the analyst was thinking implied volatility is high. So, they thought writing calls was a good idea. Reuters is doing a story on it, I think. I’ll try to post a copy.
The spread is bullish through the rest of 2010, as it is focused on the 2011s. They might think Monday’s earnings will be a catalyst for a move higher. They paid $3.40 (excluding commissions) and could potentially make $6.60 if XOM settles above $75 by the Jan 11 expiration. It’s a substantial investment on 14,500 contracts and an interesting trade if someone is bullish on the energy sector and XOM.