Bulls are piling into this Warren Buffett favorite ahead of earnings
The rise in crude oil prices is increasing investors’ appetite for one of the energy industry’s most notable leaders.
Investors flocked to bullish option trades Western Oil (OXY) Ahead of Tuesday’s earnings report, call volumes were outpaced 7-to-1, with more than three times the number of calls bought than sold in Monday’s session.
Nine of the 10 largest transactions in dollar terms buy upside risk through calls or call spreads.
In one of the biggest trades of the day, a trader spent $175,000 on a call spread that expires this Friday. They bought just under 5,000 of the 63-strike calls on OXY and sold the same amount of 69-strike calls; this was a bullish bet on the stock seeking a new one-year high by the end of the week.
West, YTD
Occidental shares closed up 2.7% on Monday and traded slightly lower on Tuesday.
Recent earnings history provides a compelling example that a positive earnings response can occur. Occidental’s shares have risen after 10 of its last 12 reports, including a 10% decline following its most recent report in February. After Monday’s rise, it’s up 42% this year, compared to a 30% rise this year. State Street Energy Select Sector ETF (XLE).
The company has long been a favorite of Warren Buffett, with Berkshire owning 27% of outstanding shares as of the end of the first quarter.
