Last week, I was buying Puts on Exxon Mobil Corporation (NYSE: XOM).
The trade worked exactly as planned.
This is my new setup.
The de-escalation narrative pushed oil stocks lower, and anyone positioned correctly made money on the way down.
But I just made an opposite trade on a different oil stock…
It’s the same sector, in the opposite direction, and I won again.
That might sound confusing. I’ll explain everything.
This is exactly how I trade the hottest sector in the market right now.
Oil Price Swings
I don’t buy the happy-ending story for the war just yet.
We’ve already seen a lot of volatility and very few signs of de-escalation.
Trump posts about “great progress” in peace talks, and oil prices drop lower. Then Iran contradicts everything, tensions pick back up, and oil rips higher again.
This has already happened a few times since the war began on February 27…
Most traders will get eaten by the whipsaw as they try to guess which headline will come out next.
I’m not guessing about headlines. I’m watching the chart, waiting for the move to get overextended, and positioning for a pullback or rally.
That’s exactly what happened with XOM and OXY.
Here’s the move I covered on XOM.
When XOM got overextended to the upside, and Trump started boasting of peace talks, I rode the momentum lower.
Then, I saw that OXY sold off on March 31 and April 1 as Iran denied Trump’s claims, and I traded the rally.
Here’s XOM as it fell lower:
Here’s OXY as it rallied on April 2:
My OXY Trade
OXY fell lower for multiple days this week after making new highs on March 31 as peace-talk optimism dragged the entire energy sector down.
By the afternoon of April 1, the selloff looked exhausted, OXY was pushing back above $62, and it seemed prime for a bounce.
I didn’t need OXY to reverse the entire war-driven selloff. I just needed it to jump a bit. And jump it did.
By the morning of April 2, OXY had pushed from the low $61s back above $65. I exited between 9:30 and 10:30 A.M. EST, right into that strength.
The whole trade lasted less than 24 hours.
Could it have gone higher? Maybe. But that’s not the point. The point is, we got out with gains before Trump’s next Truth Social post could destroy our thesis.
Why This Works
Here’s what most traders miss about this war…
The Iran conflict hasn’t created a one-directional oil trade. It’s created a pendulum.
Peace talks push prices down. Escalation brings prices back up. Back and forth, back and forth.
And every swing is a tradeable opportunity, if you know what to look for…
Early this week, the pendulum swung toward de-escalation. Puts on XOM made sense. But then the pendulum swung too far, the selloff got overextended, and Calls made sense.
I’m not bullish or bearish on oil. I’m just trading the ebb and flow of the most volatile sector in the market. And options are the perfect tool for it.
I’m not done with oil.
The war isn’t over. The peace talks are still chaotic.
This pendulum is going to keep swinging, and I’ll be ready on both sides of it.
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
