If it was just this one company triggering a sell signal, we might start to wonder. But since our chart analysis also triggered a sell signal on Sunoco (ticker - SUN) within the past few days, the argument favoring additional downside is now much more convincing. The caveat: Symmetrical Triangles are the least predictable of all chart formations, since 16% of the time, the shares initially breakout in the wrong direction, before reversing course and heading the other way.
Now here's the best part: You can profit from a downside move between now and October option expiration for NO MONEY DOWN, or even get paid to initiate a bearish position (possibly not even including commission), by selling an out of the money call spread for a credit, then utilizing that credit to finance a shorter-term put option purchase.
Two possibilities you might consider are as follows: 1) Sell a January 2011 $62.50/$65.00 call spread for $0.95 and then use those proceeds to purchase an October $60 put for $0.94. You would receive a $0.01 credit to initiate this position, while the cost to you would be only the commission. 2) Or you could sell a January 2012 $62.50/$65.00 call spread for a $1.10 credit and use the proceeds to finance that same October 2010 $60 put for $0.94, netting you an immediate $0.16 per share gain before commission.
Note: Your maximum risk would be
$2.50/share times however many option contracts you trade and margin requirements
might also apply if you don't own the underlying security, which
in this case is Exxon Mobil stock.