This energy giant will surge even higher, and here’s how to play it: Trader

ExxonMobil's Monday morning rally is only the start of a surge back to previous highs, says one trader who is making a bullish bet on the stock.

The oil giant is up more than 2.5 percent as of midday Monday trading, fueled by crude oil's surge on the back of an agreement to cut production, which was set by both OPEC and non-OPEC countries as speculation that CEO Rex Tillerson could be nominated for secretary of State has circulated. Exxon shares have struggled since hitting highs for the year in July, but Todd Gordon says the stock's latest breakout above $90 will actually take the oil company even beyond its 2016 peak.

"I like the bottoming formation in crude, but I think better opportunity rests in trading in the actual energy stocks," Gordon said Monday on CNBC's "Trading Nation."

While an "upside channel" on a longer-term chart of Exxon has Gordon thinking that the oil company "could [reach] all the way to triple digits," he is making a shorter-term bet that Exxon could rise another 4 percent over the next month. According to Gordon, the stock has broken through its past "resistance" of $89, and with that level now being "support," Exxon can move as high as $96.


To bet on an Exxon rally, Gordon wants to buy the January 90-strike calls and sell the January 95-strike calls for about $2 per share, or $200 per contract, set to expire on January 20.

This means that Gordon is risking $202, but if Exxon rises above $92 on expiration, Gordon's trade would return a profit. The maximum reward of $300 would come if the oil giant closes at or above $95 at expiration.

Exxon share are currently up 17 percent this year.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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