Oil Slide

Exxon chart

Chart by Steven Sarnoff, h/t stockcharts.com

OPTIONS HOTLINE Reco Update, FYI:
+126% in 2 months on XOM puts!

The Exxon (XOM) December $40 put, recommended August 1 for $3.50 or less, closed October 1 at $7.90, +126% in 2 months, with an always known and strictly limited risk!

That is the Superleverage Power of my method on display.

We look for options that are set to move from “out-of-the-money” to “in-the-money.”  That is where your greatest returns are made.

An option’s premium (price) is made up of intrinsic (real) value plus time value (time left until expiration and volatility).  Out-of-the-money options have no intrinsic value.  Their premium is only for time and volatility.

I only recommend an option if our targeted real value is twice the premium.  That is what we call “sensible speculation.”

Here’s the recommendation part of the bulletin I emailed Options Hotline subscribers on August 1:

Buy the Exxon Mobil December $40 put for $3.50 or less, good this week.

Shares of Exxon Mobil Corp. trade on the New York Stock Exchange under the symbol “XOM”. The expiration date for this option is December 18, 2020.

XOM closed Friday at $42.08. Its 52-week range is $30.11-$75.18. The recommended option closed $3.45 bid at $3.70. The $40-strike put is an “out-of-the-money” option, with its premium for time and volatility only. Your broker can give you more information on the Texas-based oil & gas company, but I’ll tell you why I like a put recommendation here.

As you can see on my daily candlestick chart below, XOM has moved sideways for the past four months. The jump up in early-June left an island top in place. Sellers have the edge, as depicted by the negative influence on price by the lines of average price movement (shown in green and blue). The next two months may see an acceleration lower.

Support is at: $40-$41, $35-$38, and $28-$32. Resistance at $43-45. You may use $46 as a stop-loss level.

Traders may target a move toward $30.

If XOM falls to $30, each $40-strike put will have $10.00 of intrinsic value. If my expectations go awry and XOM is at or above $40 on the third Friday in December, your option will expire worthless. That is your risk.

Exxon chart

Chart by Steven Sarnoff on 07-31-20, h/t stockcharts.com

What happened?

You can see from the daily candlestick chart at the top of the post (and just below this paragraph) what ensued.  XOM shares continued a snapback bounce, above $45, before resuming their major slide toward longer-term support (demand) near $30.

Exxon chart

Chart by Steven Sarnoff, h/t stockcharts.com

I can’t guarantee that all my recos will multiply like August’s (XOM) and September’s (Advanced Micro Devices, AMD), but I do promise to continue to do my best to find option winners for my great subscribers.

Sign up now to see October’s recommended play (emailed today).

Stay safe!

Steve

 

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