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OXY Options Analysis - Institutional Positioning

Frank Gibbs January 2, 2026 11 min read 22 views

OXY Options Analysis

Occidental Petroleum | Jan 16, 2026 Expiration (16 DTE)
$41.06
Current Price
36,883
Call OI @ $43
26,277
Put OI @ $40
$40-$43
Institutional Range

The Story: Institutions Are Selling Calls, Not Buying Them

The massive open interest at the $42-$43 strikes (85,375 contracts) isn't bullish speculation. It's institutions selling covered calls against their OXY stock positions.

What this tells us:

  • Bearish-to-Neutral Outlook: Large shareholders (funds, Berkshire, etc.) are willing to cap their upside at $42-$43. They don't expect the stock to break higher.
  • Income Generation: They're collecting premium while waiting for a turnaround that's "a 2027 story" per analysts.
  • Resistance is Real: If OXY approaches $43, these covered call sellers have no incentive to buy back. The calls expire worthless = they keep the premium.
  • The $40 Put Wall: 26,277 put contracts at $40 suggests institutions are also selling puts for income, defining the floor.

The Trade Thesis

Institutions have defined the range: $40 floor (put selling) to $43 ceiling (covered call selling).

The smart money trade is to do what institutions are doing: Sell volatility, collect premium, and profit from OXY staying range-bound.

Buying calls outright means you're betting against this institutional positioning. You need OXY to break through $43 - the exact level where 36,883 covered calls are written. That's fighting the tape.

The Evidence

$43 Covered Call Wall BEARISH

36,883 call OI at $43 - institutions selling calls against long stock. They're betting OXY stays below $43.

Analyst Downgrades BEARISH

BofA cut to $54 (from $68), UBS to $50 (from $57). Stock down 15% in 3 months. Source

$40 Put Support SUPPORT

26,277 put OI at $40 - institutions selling puts for income, creating a floor.

Dividend $0.24 INCOME

Ex-date Jan 15, 2026. Supports the stock near-term. OXY IR

Berkshire Deal PRICED IN

OxyChem sale for $9.7B is long-term positive but already reflected in price. CNBC

Elevated Near-Term IV SELL IT

16 DTE IV (26.3%) is 0.1% higher than 30 DTE (26.2%). Edge for sellers.

Open Interest: The Institutional Footprint

Key Insight: The call OI spike at $42-$43 is covered call selling, not bullish bets. These are income trades from shareholders who expect sideways action.

IV Smile (16 DTE)

Note: IV is elevated across strikes. Selling options (Iron Condor, spreads) captures this premium.

Strategy Comparison: Sell IV, Don't Buy It

Strategy Type Cost/Credit Max Profit Max Loss Breakeven Best If...
Iron Condor Sell IV +$46 $46 $154 $39.54-$43.46 OXY stays $40-$43 (institutional range)
Calendar Spread Sell IV -$44 ~$75 $44 $39.75-$42.50 OXY pins at $41
Bull Put Spread Sell IV +$25 $25 $175 $39.75 OXY holds above $40 support
Buy Call Buy IV -$103 Unlimited $103 $42.03 OXY breaks $43+ (fighting institutions)

Recommended Strategies

RECOMMENDED - Align With Institutions
Iron Condor $38/$40 | $43/$45

Sell $40 Put / Buy $38 Put + Sell $43 Call / Buy $45 Call

+$46
NET CREDIT
-$154
MAX LOSS
$39.54
LOWER B/E
$43.46
UPPER B/E
Why: You're doing exactly what institutions are doing - selling volatility within the $40-$43 range they've defined. The $40 put wall is your floor. The $43 call wall is your ceiling. Collect $46 if OXY stays put.
ALTERNATIVE - Exploit IV Term Structure
Calendar Spread $41

Sell Jan 16 $41 Call / Buy Jan 30 $41 Call

-$44
NET DEBIT
+$75
MAX PROFIT
$39.75
LOWER B/E
$42.50
UPPER B/E
Why: Near-term IV (26.3%) is 0.1% higher than far-term (26.2%). Sell the expensive short-dated option, own the cheaper long-dated one. Profits from time decay differential.
ALTERNATIVE - High Win Rate
Bull Put Spread $38/$40

Sell $40 Put / Buy $38 Put

+$25
NET CREDIT
-$175
MAX LOSS
$39.75
BREAKEVEN
~69%
WIN PROB
Why: Just need OXY to stay above $39.75. The 26,277 put OI at $40 shows institutions are selling puts here too - they believe it's support.
NOT RECOMMENDED - Fighting the Tape
Buy $41 Call Outright

Long Jan 16 $41 Call @ $1.03

-$103
COST
Unlimited
MAX PROFIT
$42.03
BREAKEVEN
~53%
WIN PROB
Why Not: You're betting OXY breaks through $43 - where 36,883 covered calls are written by institutions. They have no incentive to push it higher. You're paying elevated IV and fighting time decay. This is a bet against institutional positioning.

Payoff Diagrams

Iron Condor - Profit Zone Matches OI Walls

Calendar Spread - Sell Near-Term IV

Bull Put Spread - Ride the $40 Support

Long Call - Must Break $43 Wall

Bottom Line

  • The OI tells the story: 36,883 calls at $43 = institutions selling covered calls, not speculators buying calls
  • They're bearish-to-neutral: Willing to cap upside at $43 in exchange for premium income
  • The range is defined: $40 (put selling support) to $43 (covered call ceiling)
  • Trade with institutions: Sell volatility via Iron Condor, Calendar, or Bull Put spreads
  • Don't fight them: Buying calls = betting OXY breaks through the wall they've built

https://pagerankcafe.com/pressRelease/blog/oxy-options-analysis

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