Exxon Mobil (XOM): Unusual Trading Activity

| April 25, 2012 | 0 Comments

XOM OptionsOptions in Exxon Mobil are lighting up our tracking system this morning with a large amount of unusual trading activity.

Well, the largest market cap company in the world (Apple) came out with earnings yesterday and the second largest is now on deck.

Mega oil company Exxon reports earnings tomorrow morning.

So, how are option traders positioning for this highly anticipated event?

With the broad market substantially higher this morning on the heels of Apple’s blowout earnings yesterday, XOM is trading up at $86.90 a share.  And option traders are expecting more good news tomorrow.

Right out of the gate this morning, one option trader came and purchased the XOM April (weekly) $87.50 strike call options.

In a single print, he purchased 5,000 contracts at an average price of $0.40.  A total cost of $200,000.  And now he’s got unlimited upside potential above $88.10!

Remember, buying call options is a strategy used when you think a stock is going to move higher.

This was a well-planned strategic and inexpensive play on this company.

So, what’s behind our option traders thinking?

As you know, Exxon Mobil engages in the exploration and production of crude oil and natural gas.  They also transport and sell crude oil, natural gas, and petroleum products.

As of December 31, 2011, Exxon Mobil operates 37,692 operated wells. They have operations in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania.

But, I think the outright call buying is because of a few other factors…

There are other oil and gas companies that don’t have the resources or expertise to effectively explore and produce oil and gas in their countries. They’ll need to partner with private firms, and Exxon is the most attractive option.

Also, with high-performing operations and global integration, Exxon is one of the best positioned to weather a drop in commodity prices.

In fact, that’s exactly what’s been happening lately.

And this diversity of operations, as well as its vast geographic footprint, offer protection against regional economic weakness.

So, XOM would definitely be a company I’d purchase.

But for our traders sake, let’s hope he’s right and Exxon reports another stellar quarter this afternoon.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.