Buy Alert: August 21, 2013

Marcus Haber | August 21, 2013

Buy Alert: August 21, 2013

Trade Details

Buy Exxon Mobil (XOM) October $90 Calls for $0.85 or better

Why?

XOM, the world’s largest oil company, has been down a ridiculous 19 out of the last 20 trading days. The stock has now reached severely oversold levels. Just look at the chart below. The share price is now trading below all three major moving averages.

The recent selloff really doesn’t make a whole lot of fundamental sense. After all, crude oil is still trading at historically high levels. Investors have been shying away from Big Oil lately, possibly due to issues in the Middle East once again rising to crisis levels.

But inevitably, it’s short-term noise. XOM is too big and powerful of a company to trade at this valuation level for long. Let’s grab October calls and give our trade some time to develop.