Occidental Petroleum $OXY: Unusual Call Option Activity…

| December 3, 2015 | 0 Comments

oilBig Call Option Buyer In Occidental Petroleum $OXY!

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

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.

But someone with a big bank roll might see it differently…

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!

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

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!

Let’s be clear…

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

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.

Here’s something else I find interesting…

Will $OXY Call Option Bet Pay Off?

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.

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.

One thing is for certain…

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.

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

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Crude Oil, Natural Resource Stocks

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.