DailyPlay – Opening Trade (XOM) – October 2, 2024

XOM Bullish Opening Trade Signal/ Trade Adjustment

Investment Rationale

Buy an extra November 1 $125 Call. I would prefer to pay $1.54 for the extra call, which is the net credit received from the initial credit spread. This makes the debit for the long call equal to the net credit received from the initial trade, putting us at even as far as debits and credits are concerned.

I like to call this strategy, “I don’t want the cheese anymore; just get me out of the trap.” If we break significantly above $120, the trade could become profitable – the sooner, the better for that breakout to the upside. If the stock pulls back and declines, we’ll likely let everything expire worthless, and in that case, we would break even on the entire position.

If you let too much time pass and the stock drifts up, that’s a bad outcome. We still have a short spread from $120 to $125 at expiration, and if we ride it all the way to expiration and the stock stops at $125, the extra long call does not help.

XOM – Daily

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Call

Details: Buy to Open 6 XOM November 1 $125 Calls @ $1.61 Debit per Contract.

Total Risk: This trade has a max risk of $966 (6 Contracts x $161) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $161 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is in a bullish trend.

1M/6M Trends: Bullish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 51

Stop Loss: @ $0.81 (50% loss of premium)

View XOM Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Tuesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View XOM Trade