Occidental Petroleum $OXY: Unusual Call Option Activity…


Presentation Description

A big call option bet in Occidental Petroleum $OXY has me wondering if tomorrow’s OPEC meeting will bring an unexpected surprise!


Presentation Transcript

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Commodity Trading Research Occidental Petroleum $OXY: Unusual Call Option Activity…

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Hi, My name is Justin and I‘m with Commodity Trading Research , today were reviewing our recently published article…

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Occidental Petroleum $OXY: Unusual Call Option Activity…

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As I mentioned a few day’s ago, tomorrow’s OPEC meeting has big consequences for the oil market . If smaller OPEC members convince Saudi Arabia to cut production, we could see a sudden upturn in oil prices.

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On the other hand if the Saudis stick to their guns, an abrupt downturn into the mid-$30 a barrel range becomes quite possible.

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Which is the most likely scenario ? As I mentioned on Tuesday, the de-facto leader of the Middle Eastern oil cartel, Saudi Arabia, will likely hold production steady in an effort to retain market share.

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But someone with a big bank rollmight see it differently…

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On Tuesday a well-heeled trader bought 14,000 Occidental Petroleum $OXY $76.50 calls expiring on December 18th, 2015. With the trader paying $1.00 a contract to open the position he’s making a $1.4 million bet!

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Keep in mind, $58 billion market cap $OXY is the second largest independent oil and gas producer in the world behind ConocoPhillips $ COP.

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I don’t know about you, but to me it looks like someone is betting Saudi Arabia is about to fold under the pressure of low oil prices!

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Let’s be clear…

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If $OXY closes below $76.50 on December 18th, 2015, our esteemed trader will instantly lose $1.4 million.

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But with the results of the closely watched OPEC meeting hitting the wires late tomorrow, we’ll very likely know how this trade pans out by the middle of next week.

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Here’s something else I find interesting…

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As you can see, $OXY is trading at a very important technical downtrend (red line) from the early 2015 highs. Should OPEC surprise the market tomorrow, a break above $77.50 resistance will bring in a slew of new buyers.

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On the other hand, if bulls retreat from the $77.50 area on an uneventful OPEC meeting,a quick downturn towards $70 will likely play out.

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One thing is for certain…

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I’m keeping a close eye on $OXY and many other oil producers tomorrow and early next week. A surprise production cut from OPEC will get me instantly bullish on much of the oil exploration industry.

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Keep in mind, oil industry ETFs are a quick and efficient means of diversifying in the oil industry.

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