Exxon Options Trade Before Earnings Analysis

In recent weeks, energy stocks have seen significant gains as investors pivot away from technology and consumer discretionary sectors. This shift highlights a broader trend in market behavior, with energy companies outperforming other sectors. Market breadth, an essential indicator of market health, reveals that while 64% of stocks in the index have risen this year, a remarkable 75% of the 41 energy firms have also experienced gains. Leading the charge is Exxon Mobil (XOM), which has risen 18% year-to-date, while Chevron (CVX) has increased by 5%, albeit trading at a slight valuation discount compared to Exxon. Despite Exxon's status as the most expensive integrated oil company, its price-to-earnings ratio of 12.5 and enterprise value to EBIT of 9.5 suggest that it is relatively "cheap" in the current market context. However, these multiples are considered average, as energy companies typically trade at lower valuations due to the anticipated shift towards greener energy sources. Investors may find some solace in the current low options premiums, which could present opportunities for strategic trading. Should the stock price decline following earnings reports, traders might consider selling downside puts to mitigate the costs associated with their positions. It is important to note that this analysis is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Investors should consider their unique circumstances before making any financial decisions.