DailyPlay – Opening Trade (XOM) – October 3, 2023

XOM Bullish Opening Trade Signal

View XOM Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 5 Contracts Nov 17th $115/$125 Call Vertical Spreads @ $3.69 Debit per contract.

Total Risk: This trade has a max risk of $1,845 (5 Contracts x $369) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $369 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to break out higher.

1M/6M Trends: Neutral/Bullish

Technical Score: 8/10

OptionsPlay Score: 105

Stop Loss: @ $2.00 Credit (50% loss).

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 Monday’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. 

Investment Rationale

A recent pullback in oil prices has presented an opportunity to seek long exposure in energy stocks where the risk/reward ratio is more favorable. XOM currently is knocking on an all-time high triple top of $120 and the recent pullback to its 21D moving average of $155 provides an entry point to play for a potential breakout higher. With oil prices finding support around the $88 level, look for energy stocks to also find stabilization at these levels and potentially start trading higher if oil prices continue to spike. I’m looking to buy the Nov $115/$125 Call Vertical @ $3.69 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 5 Contracts for a risk of $1,975. We will set a stop loss on the put spread at around 50% of the premium paid @ $2.00 Credit.

XOM – Daily