Exxon (XOM) has been a fantastic own the last two quarters as the Oil & Gas industry ushered in a new era of capital discipline and returning cash to shareholders allowing for historic low multiples to re-rate higher.

The options market was once again ahead of this move, our featured write-up dated 9-8-2021 saw a trend of large bullish positioning in XOM and that has continued the last few months. XOM shares have gained more than 55% in the five months since the write-up, and the options multiples of that return. Once again large put sellers called bottom and were dead-on.

Here was the 9/8 write-up:

Exxon (XOM) with a surge in call activity late on 9/8 as 15,000 November $55 calls were bought in offer sweeps $2.24 to $2.28 and a block of 2900 November $50 puts sold for $1.40 as well. XOM flows have been all bullish since May and has 5000 January 2023 $60 short puts, 2250 June 2022 $50 short puts, 2500 January 2023 $62.5 short puts, and 1000 April $60 short puts in open interest from recent trades while June $57.50 puts with 5500+ sold to open in late June trades. XOM has pulled back from late June highs with the rest of the Energy sector but looking to base on its rising 200-day moving average with $55.75 and $56.50 two key levels to clear near-term for a trend inflection. XOM’s recent low near $52 was right at VWAP off the October 2020 lows so reward/risk here looks favorable considering the short put strikes in open interest. Exxon is a large cap diversified energy company participating in exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products. XOM announced in August it is seeking buys for is US shale gas properties, a potential catalyst, and XOM also targeting a zero-carbon pledge by 2050. XOM has been targeted by activist firm Two Engine No. 1 along with Chevron. XOM currently has a market cap of $231B and trades 11.2X Earnings, 6X EBITDA and 1.47X Book with a 6.4% dividend yield. XOM’s EBITDA is seen rising 36.6% in 2021 and 6.8% in 2022. XOM has been seeing strong core growth businesses such as Guyana, Chemicals and the Permian. Guyana is a world-class project, two discoveries in 2Q (Uaru-2 and Long Tail 3) and announced Whiptail in August. XOM is also seeing strength in the Chemicals business and expects margins to stay strong. Analysts have an average target of $66 and short interest is minimal at 0.8% of the float. Goldman rates shares a Buy with a $66 target as a favorite out of consensus pick seeing the Refining business at a tough set to improve, better pricing at Upstream, and strong FCF and balance sheet improvements. Piper raised its target to $69 in July positive on the upside into 2H with crude oil tightness.