Bulls Are Piling Into This Warren Buffett Favorite Ahead of Earnings

Why It Matters

Heavy options buying signals market confidence that OXY will beat estimates, potentially driving further price gains and benefiting Berkshire’s sizable stake.

Key Takeaways

• Call volume exceeds puts 7‑to‑1 ahead of earnings.
• $175,000 call spread targets $63‑$69 strike range.
• OXY up 42% YTD, outpacing energy ETF.
• Berkshire owns 27% of Occidental shares.
• Stock rallied after 10 of last 12 earnings reports.

Pulse Analysis

Rising crude oil prices have reignited interest in the sector’s heavyweight, Occidental Petroleum (OXY). In the days leading up to its May 5 earnings release, options markets showed a pronounced bullish tilt: call contracts outnumbered puts by a 7‑to‑1 ratio, and nine of the ten largest trades were long‑call positions. One standout trade involved a $175,000 call spread buying 5,000 contracts at the $63 strike while selling the same quantity at $69, a structure designed to profit from a rapid price surge before the week’s end.

Occidental’s appeal extends beyond short‑term price moves; it is a cornerstone of Warren Buffett’s portfolio, with Berkshire Hathaway holding roughly 27% of the outstanding shares as of Q1. Buffett’s confidence stems from OXY’s disciplined capital allocation, strong cash flow, and its strategic position in the high‑margin upstream segment. Historically, the stock has responded positively to earnings, climbing after 10 of the last 12 reports and delivering a 10% jump after the February filing. This track record reinforces investor expectations that the upcoming results could trigger another rally.

For traders, the confluence of bullish options flow and Berkshire’s sizable holding creates a feedback loop that can amplify price movements on any earnings surprise. While the upside potential is evident, the market remains sensitive to oil‑price volatility and any guidance that deviates from analysts’ forecasts. Investors weighing exposure should consider the risk‑reward balance: a strong beat could push OXY toward new yearly highs, whereas a miss might trigger rapid unwinding of the aggressive call spreads that have already flooded the market.