A World-Class Business Not to Overlook

Oil hit its highest level since 2014.

Oil sector companies have been struggling a long time during the low oil price.

The $350 billion oil giant ExxonMobil (XOM) should be minting money. This business is diversified and less vulnerable to oil-price declines than other energy companies.

This stability has made it possible for Exxon to increase its annual dividend in each of the last 36 years. It now offers investors a market-beating 4% dividend yield.

In the chart below, Exxon shares tanked from February through the end of March of this year. And over the last year, shares are basically flat. But Exxon looks to be establishing a new uptrend.

Exxon will be a great bullish trade on a break out to new highs. For income traders we like to take advantage of these waiting periods and potentially pick up shares at a discount.

Trade details:

Sell the August 17, $82.50 puts on Exxon for no less than $2.15 (use a limit order). Instant 2.6% payout on your purchase obligation for agreeing to buy shares at a 0.6% premium to yesterday's closing price of $81.97.

At expiration if shares are above $82.50: put sellers will keep the $2.15 free and clear. In seven weeks, that comes to a 19.4% annualized return.

At expiration if shares are below $82.50: put sellers will buy shares at a 2% discount to current price. Then you can start selling covered calls and potentially some of the 4% annual dividend.

Use a stop loss at $72. That's 12% below current price and below end of March lows.

Earn income while ExxonMobil shareholders wait for a positive change.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

P.S. Trade Updates

Philip Morris (PM) is at a two-month high of $81.66. If you sold the August 17, $77.50 puts on June 21 recommendation, you're on track to earn 2.6% in a little less than two months. That's 16.4% annualized. Keep stop loss at $70.

Corning (GLW) (glass manufacturer for electronics) fell to $26.99, about 4% away from our stop loss at $25.75. If you sold the August 17, $28 puts on June 21 recommendation, pay close attention to the stop loss and buy to close the put the day after it is violated.