Interesting XOM Put And Call Options For November 21st

Investors interested in Exxon Mobil (XOM) can consider options strategies to enhance returns: selling the $90 put expiring in November offers a potential 1.41% return if it expires worthless, while a covered call strategy at the $105 strike could yield 7.43% if the stock is called away. Analytical data suggests an 81% probability of the put expiring worthless and a 49% probability of the call expiring worthless, offering annualized YieldBoosts of 3.01% and 12.29% respectively, according to Stock Options Channel.

Analysis

Exxon Mobil (XOM), trading at $103.28 per share, presents options strategy opportunities as highlighted by Stock Options Channel. For investors interested in acquiring XOM shares at a lower price, selling the $90.00 strike put contract with a current bid of $1.27 could be considered. This strategy implies a commitment to purchase XOM at $90.00, leading to an effective cost basis of $88.73 per share (a discount of approximately 13% from the current price) if assigned, before commissions. Analytical data suggests an 81% probability that this put contract will expire worthless, in which case the collected premium would represent a 1.41% return on the cash commitment, or a 3.01% annualized YieldBoost. Alternatively, for current XOM shareholders, selling the $105.00 strike call contract, with a current bid of $5.95, as a covered call could generate income. If XOM shares are called away at $105.00 by the November 21st expiration, this strategy would yield a total return of 7.43% (excluding dividends, based on the current share price and premium received), before commissions, though it caps upside potential. There is a 49% assessed probability of this call expiring worthless, which would result in a 5.76% YieldBoost on the shares, or 12.29% annualized, from the retained premium. The implied volatility for the put is 26% and for the call is 27%, both slightly higher than XOM's calculated actual trailing twelve-month volatility of 24%, suggesting a marginal richness in option premiums which could benefit sellers.

Key Decisions for Investors

• Investors seeking to acquire Exxon Mobil shares at a lower effective price than $103.28 could evaluate selling the $90.00 put, targeting an $88.73 cost basis or a 3.01% annualized yield if the option expires unexercised.
• Current Exxon Mobil shareholders could consider a covered call strategy by selling the $105.00 call to potentially achieve a 7.43% total return if shares are called away, or a 12.29% annualized yield from the premium if the option expires worthless, while acknowledging the cap on further stock appreciation.
• The observed implied volatilities of 26-27% being slightly above the historical volatility of 24% may present a marginally more favorable environment for option selling strategies on XOM.
• Investors should carefully assess XOM's fundamental outlook and their individual risk tolerance, particularly the obligation to purchase shares when selling puts and the limitation on upside profit potential when selling covered calls.