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Two Chevron (CVX) Option Trades to Consider For Upside Potential On a Possible AI Re-rating

Published on June 24, 2025

Jeff Jacobson

With the pullback in oil the past two days, and the accompanying move lower in Chevron (CVX), I thought this would be a good opportunity to discuss adding long-term upside exposure via options given Jordi Visser’s positive view on the name (here). While shares are up from their April lows, they remain well below their early April highs ~ $170. In addition, as the energy/oil trade has come under pressure the last few years, the CVX/SPY relative spread remains slightly above the 5-year lows (see below). Given Jordi’s longer-term positive view, coupled with how out of favor the stock/sector has been, we like the risk-reward of playing for upside from current levels.

Looking at CVX 6-month volatility, we can see a significant drop in vol from the April highs but it remains well above the May lows. Therefore, when looking at upside trades thru the end of the year, I want to still be mindful of this “rich” implied volatility. I have two trades I like that can play for upside, but also mitigates some of the cost/volatility.

Trade #1 – CVX December upside risk-reversal:

Sell CVX Dec 135 Puts

Buy CVX Dec 155/185 call spread

Trades for ~ EVEN (CVX 145.75 ref)

Trade Details:

Selling the 7.5% downside December puts (at what appears to be strong support) to buy the 30-point upside call spread
Upside call spread starts ~ 6% higher and is capped to the upside just below the all-time highs
Selling the put covers all the cost of the upside call spread. Either own shares at what should be support, or participate on any upside between 155 and 185 by December expiry
Dec expiry allows time for bullish thesis to play out, and for perhaps a re-rating higher based on an AI transition
Structure can be added to an existing long equity position, or as an entry-point trade in the name
Please reach out to me or the 22V sales desk for updated pricing and execution capabilities

Trade #2 – CVX December upside call spread

Buy CVX Dec 160/185 call spread for ~ $4 (CVX 145.75 ref)

Trade Details:

Buying the upside Dec call spread as a defined-risk way of adding upside exposure
Call spread starts ~ 10% above current levels and is capped to the upside just below the all-time highs
Call spread offers a 5.25x to 1 max payoff on the limited-risk trade
Structure can be added to an existing long equity position, or as an entry-point trade in the name
Please reach out to me or the 22V sales desk for updated pricing and execution capabilities

CVX shares still ~ 13% below their April highs. Like using the long-term support ~ 135 as part of an upside risk-reversal option trade

CVX/SPY relative spread just above the 5-year lows

CVX 6-month (Dec) 10% upside call vol still well above the May ’24 lows

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