4 Trade Ideas for Chevron: Bonus Idea

• Posted by Greg Harmon
• on October 3rd, 2022

Here is your Bonus Idea with links to the full Top Ten:

Chevron, $CVX, comes into the week flagging after a fall from support. It is now back below the 200 day SMA. The pause brought the price back within the Bollinger Bands® and it now has a falling RSI in the bearish zone and MACD negative and dropping to deal with. There is support at 140.50 and 139 then 132.50 and 123.50. Resistance higher sits at 145.75 and 150 then 152.75 and a gap to fill to 154.75 before 158.50 and 160. The stock pays a dividend with a 3.95% annual yield and has been trading ex-dividend since August 18. The company is expected to report earnings on October 27.

The October monthly options chain shows the largest open interest at the 160 strike on both the put and call side, then 135 and 140 on the put side followed by 155 on the call side. In the October 28 Expiry chain, the first to cover the earnings report, the at-the-money straddle is pricing in a 12.50 move or 8.7% from the current price. It has biggest open interest at the 148 put strike. November options show open interest spread from 125 to 155 and then again at 105 on the put side. On the call side it’s spread from 150 to 185.

Chevron, Ticker: $CVX

Trade Idea 1: Sell the stock short on a move under 140.50 with a stop at 145.

Trade Idea 2: Sell the stock short on a move under 140.50 and add an October 145/150 Call Spread ($2.40) while selling the October 130 Put ($1.35).

Trade Idea 3: Buy the October 140/130 Put Spread ($2.40).

Trade Idea 4: Buy the October 135/125/120 Broken Wing Put Butterfly ($1.25).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the 3rd Quarter wrapped up, equity markets showed further weakness ending at or below the prior lows of the year.

Elsewhere look for Gold to continue its pullback while Crude Oil continues to move lower. The US Dollar Index continues to trend to the upside while US Treasuries pullback in their downtrend. The Shanghai Composite looks to continue the move lower while Emerging Markets accelerate to the downside.

The Volatility Index looks to remain elevated and heading higher making the path easier for equity markets to the downside. Their charts look weak, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY have now set new lows and still look weak. The IWM exhibited relative strength on the week, holding in consolidation. This was the first week since April that all 3 did not move in tandem. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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