Options Corner: XOM Falls as Crude Oil Plunges

Kevin Horner analyzes Exxon's chart, noting a clear short-term downtrend after breaking the 144-145 support level, which now acts as resistance. He identifies a head-and-shoulders top pattern and suggests a bearish short call vertical spread for the remainder of the week, driven by the negative move in oil prices.

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Exxon Mobil (XOM) cautious down

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Kevin Horner 4.0

Options Corner: XOM Falls as Crude Oil Plunges

XOM; WTI

wti

Kevin Horner states 'the short of the lower move in oil early this morning tells us that there might be a potential to test the 200-day moving average' and 'given that negativity with oil', indicating a cautious downward view on oil prices in the short term.

Introduces Kevin Horner to analyze the Exxon chart and discuss trends.

Diane
Kevin Horner

Exxon has a clear short-term downtrend since March 30, breaking through the 145 support level, which now becomes resistance. The daily chart shows a head-and-shoulders top with the neckline at 144-145. The move lower in oil suggests potential to test the 200-day moving average around 134.

The stock needs to recapture 145 or validate the 200-day as support.
Asks for an example trade approach.

Diane
Kevin Horner

Recommends a short call vertical spread: sell the 140 call, buy the 145 call for protection. Max profit $185, max loss $315. This is a bearish trade for the remainder of the week, capitalizing on implied volatility decay.

If oil had bounced, we might consider a rally into the neckline, but given the negativity in oil, this trade captures volatility decay.
Confirms the trade is set because of the direction of oil prices.

Diane
Kevin Horner

Yes, the negativity in oil drives the bearish short-term view on Exxon.

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