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Zach Scheidt

Helping families build wealth so they can focus on what really matters

INCOME MODEL TRADE ALERT — OXY

July 21, 2022 at 10:20 am by Zach Scheidt

Selling OXY puts for income.

Occidental Petroleum (OXY) is an energy company with global operations and oil reserves of $3.5 billion barrels.

Higher oil prices have driven energy stocks up this year, and a short-term pullback now gives us a great entry point for a new income play.

OXY has been in the news lately, thanks to Warren Buffet’s large (and growing) position in the company. Any pullback will likely be met with buying — both by Buffet and by the army of value stock investors who follow Buffet’s investments.

The company is expected to earn $8.03 per share next year, and currently trades for just 7.6 times next year’s earnings. And the longer oil remains near (or above) $100 per barrel, the higher profit estimates will rise.

By selling the September $57.50 puts near $3.30, we’re able to collect an annualized yield near 37%, while also giving us roughly $4.10 per share in cushion between the current market price for OXY and our strike price.

  • Sell (to open) 1 OXY September 16th $57.50 put
  • Limit: $3.30 or more
  • The new position will represent roughly 6.8% of our model.
    ~~~~~~~~
  • 10:26 Executed
  • Sold 1 OXY September 16th $57.50 put @ $3.90

(Trade procedure: 5 minutes after this notification posts, I will enter the trade on my brokerage platform. Once filled I will edit this post to include execution prices.)

Please note: I am placing these trades in my own account. And while I notify the group of all trades 5 minutes before I place my own personal trades, this creates a conflict of interest. Please review all disclosures and agreements included with your subscription packet.

Filed Under: income trades Tagged With: $OXY

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