If The Ol’-Risk-Off-Trade Is Back On, Could XOM Go Back To Support?

by Dan June 2, 2011 12:54 pm • Commentary

XOM is one of the better performing stocks in the almost relevant Dow Jones Industrial Average, up almost 11% ytd. 

On a purely technical basis the chart looks very vulnerable to me as it approaches a key support level at 80, which also looks to be the neckline of a head and shoulders top…..If breached, you could have a fairly quick move back to 75 which is also the 200 day moving average……

[caption id="attachment_2348" align="aligncenter" width="300" caption="1 Yr XOM chart Provided by Bloomberg"][/caption]


With the stock at $81, I want to look for a low premium way to isolate a move to the mid to highs 70s by July Expiration:

TRADE: XOM ($81) BUY the July 77.50 /75 / 72.50 Put Fly for .20

-Buy 1 July 77.5 Put for 1.00

-Sell 2 July 75 Puts at 1.20 (.60 each)

-Buy 1 July 72.5 Put for .20

Break-Even On July Expiration:

-btwn 77.50 and 77.30 lose up to .20

-btwn 77.30 and 75 make up to 2.30

-at 75 make 2.30 or 11x your money

-Btwn 75 and 72.50 you payout trails off

-75 or below lose .20