Bulls are piling into this Warren Buffett favorite ahead of earnings

Occidental Petroleum saw heavy bullish options activity ahead of Tuesday's earnings, with call volume outpacing puts 7-to-1 and nine of the ten largest trades by dollar value expressing upside exposure. One trader spent $175,000 on a Friday-expiring 63/69 call spread, betting on a fresh 1-year high; the stock is up 42% year to date and has risen after 10 of its last 12 earnings reports. The setup is supportive, but the article is more about positioning and sentiment than a confirmed earnings result.

Analysis

The positioning tells you this is less a fundamental discovery than a volatility event with asymmetric gamma risk. When calls dominate this hard into an earnings print, the market is effectively paying for a squeeze rather than a measured rerating, which tends to help the strongest liquidity providers and hurt anyone short front-end optionality. The setup favors a sharp move if the company can force dealers to chase, but the edge is concentrated in the next 1-5 trading days, not in a durable multi-month revaluation.

The more interesting second-order effect is that OXY has become a clean, liquid proxy for both crude sensitivity and Berkshire-related sentiment. That can amplify upside because systematic and retail flows often reinforce the same trade, but it also creates fragility: any disappointment in realized pricing, upstream margin, or capital return commentary can unwind crowded calls very quickly. If crude stays firm but guidance is merely in line, the stock can still underperform because the market is already paying for an earnings beat plus a forward revision.

Contrarianly, the consensus may be overestimating how much of the recent run is still available to monetize in the near term. After a strong year-to-date move, the stock likely needs either a material beat or a change in forward oil assumptions to justify follow-through; otherwise, the path of least resistance after the print is a vol crush and mean reversion toward the pre-earnings range. The key risk to the bullish case is not oil itself but the combination of high expectations, crowded upside positioning, and a single-print time horizon.

Key Decisions for Investors

• Buy OXY upside only via tight-risk structures into the print: prefer a 3-7 day call spread over outright stock, targeting 2-4x payoff if the move forces a new high, with defined loss if the post-earnings reaction is merely 'good enough'.
• For existing OXY longs, hedge event risk with short-dated calls against stock or a partial collar; the implied move is likely cheaper than chasing spot after the print if the market de-risks on a vol crush.
• Pair trade: long XLE / short OXY for the next 1-2 weeks if you want crude exposure without single-name earnings risk. This captures sector beta while avoiding the most crowded front-end gamma.
• If OXY gaps higher on the report, fade strength only after the first 30-60 minutes and only if the move is not accompanied by upward forward guidance revisions; the post-event setup likely offers a better short entry than pre-event.
• Watch for a breakout failure near the prior 52-week high: if the stock cannot hold above that level within 2 sessions post-earnings, expect a fast reversal as call buyers monetize and dealers unwind hedges.