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EXXON
MOBIL
 
About The Company

Market Capitalization $414.6B
Revenue (FYR) $283B
EPS $4.79
P/E Ratio 15.1x
Shares Outstanding 5B
Dividend 1.76

Exxon Mobil Corporation (Exxon Mobil) is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. It is a giant in its industry.  

 

 

 
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By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not access or use this site.
Nothing presented is financial advice, trading advice or recommendations. Everything presented is the author's ideas only. The author accepts no liability for its use including errors and omissions. You alone are solely responsible for your own investing and trading. There are considerable risks involved in implementing any investment strategies and losses can be large. Trade at your own risk.

 
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  EXXON MOBIL CORP - 2010
EXXON MOBIL STOCK SYMBOL - XOM
ONGOING EVALUATION & TRADE - Year 1

The current strategy is selling puts on Exxon Mobil Stock until I either accept assignment OR get assigned shares. Then I will turn to selling covered calls on Exxon Mobil. Should Exxon Mobil stock fall too low making covered call selling impractical I will add to my stock position through selling naked puts to lower my overall cost. I am selling puts out of the money on Exxon Mobil Stock as this is an oil stock with higher volatility and wider swings in pricing. Should Exxon Mobil fall into what I believe is under valued territory I will consider selling in the money puts on Exxon Mobil Stock. As this is the first year of my trade I am starting with an option spread. From there I will move to selling Exxon Mobil puts.
EXXON MOBIL TRADES BY YEARS
VIEW EXXON 2011 TRADES
VIEW EXXON 2010 TRADES
 

 

 

 

 

 

 

 
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Should you find my strategy and ongoing evaluation of this trade of value I hope you will consider a tip for the time I spend detailing out this trade. I have set up a Paypal account for those who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice. They are just my ideas and opinions. Investing is risky and losses can be large. Trade at your own risk. Read the terms of use

 

 

YEAR 1: 2010
 Trade Commenced MARCH 2010
Goal for 2010: 10% (10 months)
Strategy: Commenced with A Bull Call Spread and changed to Naked Puts In June 2010
 
Capital In Use At End Of 2010 70,000.00
Income Earned in 2010 (10 months) 6754.25
Return On Capital in 2010 (10 months) 9.6%
   
TRADE COMMENCED March 5 2010
Mar 5 10 66.37 BTO (Bought) 5 Calls Jan 2011 $60.00 @ 8.80
This puts my stock cost at $68.80
      13.25   4413.25    
Update Mar 5 2010:  Put Selling And Spread Strategies
There is a lengthy article which describes the process by which I determined the suitability of this stock for a bull call spread, among other strategies. You can read the entire article by clicking here.

 

Mar 5 10 66.37 STO (Sold) 5 Calls Jan 2011 $70  @ 3.35
If the stock by Jan 2011 is above $70 I will be exercised at $70 and I will then exercise my 5 contracts to close the position. Remember though any time this stock is above $70 I could be exercised.
      13.25     1661.75 1661.75
    AT THIS POINT MY TOTAL RISK ON THIS TRADE IS $4413.25 less $1661.75 = $2751.50
As I want to eventually own 1300 shares I will also sell some naked puts for the additional shares.
               
Mar 5 10 66.37 BTO 10 April $55 puts @ .08
Comments: This is basically catastrophe insurance. I will roll this up if the stock moves higher. I will buy this monthly at the cheapest possible price. Remember it is just for catastrophe.
      19.50     (99.50) 1562.25
Mar 5 10 66.37 STO 5 Naked Puts Jan 2011 $55.00 @ 1.97
Comments: This will help pay for the monthly cost of buying some protection. At $55.00 I would definitely own this stock, but if it fails to reach this level, at least the money is being used to purchase protection.
      13.25     971.75 2534.00
Mar 5 10 66.37 STO 3 Naked Puts Jul 60 @ 1.25
Comments: This is in case the stock should fall as I think $60.00 is an excellent price point. I will roll this however if premiums allow.
      10.75     364.25 2898.25
Update Mar 10 2010: These ideas from an email I received from a reader of the XOM trade, may be of interest:

I am mulling your option strategies on XOM. In your comments about protection you said.
"As these are all naked puts which means the risk to the downside is unprotected, we could add a monthly catastrophe insurance by buying cheap OTM puts. The April $55 put is trading for .08 cents. With the above strategy I could add cheap insurance in the event of a plunge by looking at monthly far OTM puts, sort of like "Term Insurance"".

Just another suggestion on protective puts. Buying the March 65 puts for .15 buys you a lot more protection if the stock dives. Each month place a GTC (GOOD TILL CANCELLED) order to buy ATM (at the money) puts at .15. Its kind of fun to place long term orders that if filled are great and don't cost anything to have out there. I call it fishing and with the crazy trading these do get filled more times than not. This is throw away money, just like our personal insurance costs and most months you will lose your cost. If no fill, no loss either. One of these months and we don't know when it will happen but we know it will happen, those cheap puts could be a huge windfall and pay for all the months you may have been paying for this insurance so your cost will be zero for very good protection. You have a Jan11 65 put so why not sell a Jan11 80 call for 1.00 to use as money to pay for the .15 puts. Just another option.

My Answer: These are excellent suggestions and I will look into incorporating them in the future. The only problem I have ever had with fishing was that when I really needed the puts, I always found my fishing hadnít caught the fish so it cost far more to buy the fish at market prices, when I could have got them for next to nothing when no one else wanted to eat fish. You can tell that I love your fishing example.

The fish market example is a good one. I can see the value of just fishing for .15 cents on an ATM put. However you are assuming that you will possibly get filled for the ATM put. The fill will come if the stock moves higher, but should the stock move lower, I will end up paying a lot more for the protective put. Therefore I assume that each month I can buy catastrophe insurance for less than .10 cents. I would rather spend the money upfront, rather than find out that suddenly I am paying a lot more for what the insurance would have cost, basically wiping out months of just paying .10 cents or less. It is sort of like having a term life policy but not really paying for it. You have your "term life quote" in hand and you just keep fishing for a better quote. Then suddenly you are diagnosed with cancer or such and your premium skyrockets. That's why I labeled it catastrophe insurance. It's only for a catastrophic (life threatening) event. As to the 80 call (or basically any far OTM call), I love the idea and will look to incorporate it.

ADDENDUM TO THE ABOVE QUESTION:
For many investors it may make sense to consider selling monthly far out of the money naked calls to assist in reducing the cost of the protective put, rather than my Jan 2011 55 put. For example as of Mar 10 2010, the April 70 call is trading for .46 BID. I could short just 2 Apr 70 call and that would pay for 10 Apr 55 put contracts at .08 cents. Meanwhile should XOM move to $70.00 I could purchase 200 shares and turn it into a covered call (similar to my trades on RIM which can be seen here). That reduces the amount of capital I require for this stock and by selling the $70.00 call it is exactly what I would like the stock to do - move up. I could monitor the stock monthly and consider my strike points with each month. Right now though for my own trade, I like the 5 naked puts Jan 2011 $55.00 as I wouldn't mind being assigned at $55 and if not, they will have paid for my catastrophe insurance. REMEMBER THAT NAKED CALLS ARE AS RISKY AS NAKED PUTS, and perhaps more so. With a naked put your risk is zero, while with naked calls the risk is endless if the stock just keeps rising. I have never been concerned about either naked puts or calls. With naked calls, the stock is doing something you want it to do, move up. For me, when the stock moves up I buy the required number of shares and turn the trade into a covered call position. Remember that investing can result in large losses. Nothing on my website is financial advice or recommendations. Trade at your own risk.

Apr 16 10 67.93 Expiry: 10 Apr 55 Puts expired                
Apr 16 10 67.93 BTO (Bought) 10 May 55 Puts @ .10       19.50     (119.50) 2778.75
May 6 10 60.55 STC 10 MAY 55 PUTS @ .18       19.50     160.50 2939.25
May 6 10 60.55 BTO (Bought) 10 JUN 50 Puts @ .08       19.50     (99.50) 2839.75
May 21 10 59.50 STO 3 NP JUN 55.00 @ .89       10.75     256.25 3096.00
May 21 10 59.50 STC 10 JUN 50 PUTS @ .40       19.50     380.50 3476.50
May 27 10 61.50 STO 3 Naked Calls JUL 67.50 @ .42       10.75     115.25 3591.75
Jun 18 10 63.10 Expiry: 3 NP JUN 55 expired                
Jun 18 10 63.10 (BTO) Bought 10 Jul 55 Puts @ .15       19.50     (169.50) 3422.25
Jun 29 10 57.29 (STC) Sold 10 JUL 55 PUTS @ .77       19.50     750.50 4172.75
Jun 29 10 57.29 BTC 3 Naked Puts Jul 60 @ 3.20       10.75     (970.75) 3202.00
Jun 29 10 57.29 STO 3 Naked Puts Oct 57.50 @ 4.05       10.75     1204.25 4406.25
Jun 30 10 57.55 BTO 5 PUTS 21AUG10 45 put @ .30
Comments: Where is a rally when you need one. (Just kidding) With the market pullback, puts are becoming increasingly expensive. I have only done 5 puts and for August at the 45 level! The chance of getting this low is pretty small but then that's what I thought when i bought the Jul 55 puts. If though XOM keeps falling I will sell the Aug 45 put in all likelihood.
      13.25     (163.25) 4243.00
June 30 2010: With the odds about a double dip recession rising from 1 in 10 to now 5 out of 10, oil is selling off. XOM is under pressure and I am on the verge of closing my spread. In any uptick I will sell my Jan 60 calls but I will keep the Jan 70 calls naked for a bit longer. I believe oil could easily fall to 65.00 by this fall. (2010). Meanwhile looking at the very ugly technicals on XOM, we really should see some bounce soon. The 50 day has crossed the 150 and 200 and all technicals point to a lower stock price. Anything this ugly should bounce soon and then sell lower. On May 6 (I highlighted it), the day of the "flash crash" the stock fell a shocking 11.73% to a low of 58.46. It is important to remember that events like the "flash crash" are very important technical indicators. They tell you that the trend has changed, even if only for a while. In that crash the stock hit 58.46 and many analysts claimed it was just an error. In retrospect it was not. The stock was broken on that day and it has returned to those levels. Look at the technicals for that very day. You can see where the yellow line is on May 6. At that point all the moving averages crossed to the downside indicating a severe blow had been caused to the stock. This will take some time to recover and could easily be into next year before the stock sees 65 or higher. Only an amazing return to a strong bull market can make my bull call spread work in my favor. Therefore I will be closing it on any bounce.

 

Jun 30 10 57.55 STO 5 Naked calls August 62.50 @ .65       13.25     311.75 4554.75
Jun 30 10 57.55 BTC 3 Naked Calls Jul 67.50 @ .03       10.75     (19.75) 4535.00
Jul 13 10 59.65 STC 5 CALLS JAN 60 @ 3.70
COMMENTS: SEE MY COMMENTS UNDER JUL 15 2010 below. I have ended the spread on this stock.
      13.25   (1836.75) (2576.50) 1958.50
JUL 16 10 57.96 STO 2 Naked Puts Oct 52.50 @ 1.20       9.50     230.50 2189.00
July 16 2010: As I discussed on June 30, I planned to close the spread and did so over the past few days. I have adjusted back to sell naked calls and puts on the stock. Overall I feel oil probably cannot move higher until the worries over the possible recession recedes. However I have always been a follower of selling naked options and I think the spread was heading into a loss situation. I would much rather continue with the strategy of selling options on this quality oil company and possibly end up with some shares at a reduced cost.
JUL 16 10 57.96 STC 5 PUTS AUG 45 @ .11       13.25     41.75 2230.75
Aug 20 10 58.89 Expiry: 5 Naked Calls August 62.50 expired                
Sep 17 10 60.78 BTC 2 Naked Puts Oct 52.50 @ .10       9.50     (29.50) 2201.25
Sep 17 10 60.78 BTC 3 Naked Puts Oct 57.50 @ .35       10.75     (115.75) 2085.50
Sep 17 10 60.78 STO 5 Naked Puts Jan 52.50 @ .93       13.25     451.75 2537.25
Sep 17 2010: With the end of my planned spread I am back to my favorite strategy, selling naked puts. I have closed my Oct naked puts early and moved to Jan and grouped them together. As I already have 5 naked puts at Jan 55 I am selling this group at $52.50

 

Sep 23 10 61.23 STO 5 Naked Puts Dec 57.50 @ 1.15       13.25     561.75 3099.00
Oct 11 10 64.55 BTC 5 Naked Puts Jan 52.50 @ .20       13.25     (113.25) 2985.75
Oct 11 10 64.55 STO 5 Naked Puts Dec $62.50 @ 1.25       13.25     611.75 3597.50
Oct 27 10 65.20 BTC 5 Naked Puts Jan 55.00 @ .28       13.25     (153.75) 3444.25
Oct 27 10 65.20 STO 5 Naked Puts Dec 65 @ 1.88       13.25     926.75 4371.00
Nov 3 10 68.10 BTC 5 Naked Puts Dec 57.50 @ .27       13.25     (148.75) 4222.75
Nov 3 10 68.10 STO 5 Naked Puts Dec 67.50 @ 1.57       13.25     771.75 4994.50
Nov 9 10 70.82 BTC 5 Naked Puts Dec $62.50 @ .16       13.25     (93.25) 4901.25
Nov 9 10 70.82 STO 5 Naked Puts Jan $70.00 @ 1.88       13.25     926.75 5828.00

NOV 9 2010: With the weakness in the US dollar, commodities are rallying higher. As oil moves higher, XOM is in a general uptrend. While oil may not move a lot higher this year, I believe it will next year. I have closed my naked puts for December already and sold at the Jan 70 strike. I am still holding the Dec 67.50 strike but I will roll it shortly should XOM continue the rally.

I started back in September rolling my naked puts as the stock moved higher. In hindsight perhaps I should have owned the stock, but I have made a fair return for the effort I have put into rolling every so many weeks. When a stock such as XOM which is commodity based, is in a general uptrend, I find it better to roll up as the stock moves up, in order to capture premium as the stock moves higher. This is something a lot of investors do with covered calls. When a stock begins to move up, they close the covered call and roll up with the stock. The main thing I never liked about the roll up with covered calls is that each roll up usually was for a net debit. Then if the stock pulled back, there is a loss from constantly rolling higher as the stock moved up. Instead I have always felt that naked puts are better as stocks move higher. The naked put loses its value the higher the stock moves, allowing me to roll higher always for more income. If the rise should stall and the stock fall, I may be assigned, but I have made a decent income from the continuous roll higher, making my cost basis in the stock lower than my assigned price. For the time being this will be my strategy for XOM until the uptrend stops.

Nov 10 10 71.00 BTC 5 Naked Puts Dec 65 @ .26       13.25     (143.25) 5684.75
Dec 7 10 71.55 BTC 5 Naked Puts Dec 67.50 @ .10       13.25     (63.25) 5621.50
Dec 7 10 71.55 STO 5 Naked Puts Jan 70 @ 1.05       13.25     511.75 6133.25
Dec 23 10 73.00 BTC 10 Naked Puts Jan 70 @ .29       19.50     (309.50) 5823.75
Dec 23 10 73.00 STO 10 Naked Puts Feb 70 @ .95
COMMENTS: I am convinced that the price of oil is moving higher. I closed early for Jan and rolled into Feb to take advantage of the increased premium. I will close these early and move higher in Feb should the price of oil continue to climb.
      19.50     930.50 6754.25
    END OF YEAR 2010 - INCOME - $6754.25 = 9.6%                
EXXON MOBIL TRADES BY YEARS
VIEW EXXON 2011 TRADES
VIEW EXXON 2010 TRADES

 

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not use this site. The author of fullyinformed.com assumes no liability for topics and ideas discussed, errors and omissions, ads and their content and external links. Any corporate insignia used are registered trademarks of their respective company or corporation and are being used for identification purposes only. All material copyrighted by FullyInformed.com. Reproduction in whole or in part prohibited. Copyright © 2008

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