This OXY Trade Offers a 14.6% Annualized Yield With Meaningful Downside Protection

Occidental Petroleum (OXY) isn’t the kind of stock that usually gets people overly excited.

It’s an energy name tied to oil, and it tends to move in a steadier, less explosive way than the high-beta tech trades that often dominate the headlines.

But sometimes, that’s exactly what makes an income setup attractive.

Right now, OXY is giving us a compelling opportunity to generate income by selling a cash-secured put below the current stock price — while also positioning for a potential entry into a stock that’s quietly been gathering support from Wall Street.

Here’s the setup.

The Trade Setup

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The Numbers

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By selling this put, we collect $400 immediately.

If OXY stays above $55 through expiration, we keep the full premium. If the stock closes below $55, we could be assigned 100 shares at an effective cost basis of roughly $51.00 per share.

That gives this setup a nice mix of immediate income, respectable downside room, and the chance to potentially own OXY at a significantly lower price than where it trades today.

Why This Strike Makes Sense

The September 18 $55 put stands out because it still offers a healthy income stream while giving us meaningful room below the current stock price.

At a $4.00 premium, this trade generates a 7.3% return over 182 days. Annualized, that works out to about a 14.6% yield.

That’s still a solid number for a steadier energy name like OXY.

And because the strike sits well below the current stock price, we’re not being forced to sell an aggressively near-the-money put just to squeeze out extra income.

It also helps to think about the trade in two layers of protection.

First, the stock can fall from $59.58 to $55 before it even reaches our strike price. That gives us about 7.7% downside to strike.

Second, because we’re collecting $4.00 up front, our effective cost basis would be about $51.00. That means OXY could fall about 14.4% from the current price before we’d be underwater on the trade.

That is the kind of structure we like to see in an Income Opportunities trade.

OXY Was Already On Our Radar

This setup isn’t appearing in a vacuum.

Just a couple of days ago, I highlighted OXY in our Analyst Momentum coverage after the stock picked up a rare cluster of same-day upgrades. Wells Fargo and Piper Sandler both upgraded the shares on March 12, and several other firms had recently moved their targets higher as well.

Now we can add another fresh bullish datapoint to the list: in today’s upgrades and downgrades roundup, JPMorgan upgraded OXY from Underweight to Natural.

That matters because it suggests OXY is continuing to gain traction with Wall Street rather than fading back into the background after one good day.

I’m not looking at OXY as just some random premium-selling candidate. I’m looking at it as an income setup built around a stock that already has improving analyst sentiment behind it — and that trend appears to still be moving in the right direction.

The Stock Is Acting Better, Not Worse

Another thing I like about this setup is that the stock itself is cooperating.

Yesterday, OXY rallied about 2.1%, climbing from $58.38 to $59.58 on elevated volume. It even pushed above $60 intraday, hitting $60.73 before pulling back slightly. That move came on volume of 24.8 million shares versus a normal average around 15 million.

That’s a constructive sign.

OXY appears to be grinding higher in a steadier way. The stock is acting more like a name under accumulation than a name trying to digest an emotional blowoff move.

That makes it easier to build an income trade around.

If Assigned, the Entry Looks Reasonable

If OXY closes below $55 at expiration and shares are put to us, our effective purchase price would be about $51.00 after accounting for the premium collected.

That’s a very different proposition from simply buying the stock today around $59.58.

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At that lower basis, we’d be buying OXY at a sizable discount to the current stock price and entering at a level that looks much more attractive from a risk-reward standpoint.

In other words, if assignment happens, it’s not automatically a bad outcome. It means we’re stepping into an energy stock at a more favorable price while already having collected income up front.

The Two Scenarios

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That’s what makes this setup attractive.

If the stock holds up, we generate a solid return on idle cash.

If it pulls back, we may end up owning shares at a much lower entry point with a much better starting basis.

The Takeaway

My recommendation is simple: Sell 1 OXY September 18, 2026 $55 PUT at $4.00 or better.

This trade checks a lot of boxes:

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This isn’t the flashiest trade in the market.

But that may be part of its appeal.

OXY is acting well, the setup offers meaningful downside room, and the September expiration still provides enough premium to make the trade attractive at the right price.

Just make sure you check the latest option chain before doing anything. If the premium, stock price, or volatility profile has changed materially since this article was published, the setup may no longer look the same.

For income-focused traders looking for a steadier setup than the high-volatility tech names, this is exactly the kind of trade worth paying attention to.

Good trading!
Greg Patrick

P.S. As always, if I personally pull the trigger on this trade I’ll send the details to Dividends & Income Select subscribers.