Turn Exxon Mobil into an Income Machine with This Options Play

With markets becoming more volatile, investors might be more interested in generating income rather than capital gains. 

Exxon Mobil (XOM) has long been a staple of dividend investors and with the stock showing a low Beta of 0.29 and a high yield of 2.81%, it provides an attractive opportunity for savvy investors.

Using options we can more than double the yield on our XOM shares by using a covered call strategy.

A covered call involves selling call options against a stock position.

XOM Covered Call Example

Buying 100 shares of XOM would cost $14,836. The June 18, 2026 call option with a strike price of $150 was trading around $6.40 on Tuesday, generating $640 in premium per contract for covered call sellers. 

Selling the call option generates an income of 4.5% in 58 days, equalling around 28.4% annualized. 

Covered call traders also receive the yearly dividend of $4.12 which is a yield of 2.81%.

The covered call option premium brings the total annualized yield up from 2.81% to 31.21%.

That’s a pretty attractive yield for a low-beta, defensive stock and a lot more than what regular shareholder receive.

This also assumes the stock stays exactly where it is. What if the stock rises above the strike price of $150?

If XOM closes above $150 on the expiration date, the shares will be called away at $150, leaving the trader with a total profit of $804 (gain on the shares plus the $640 option premium received). That equates to a 5.7% return, which is 35.6% on an annualized basis.

Of course, the risk with the trade is that the XOM might drop, which could wipe out any gains made from selling the call.

Company Details

ExxonMobil's bellwether status in the energy space, optimal integrated capital structure that has historically produced industry-leading returns and management's track record of capex discipline across the commodity price cycle make it a relatively lower-risk energy sector play.

The company owns some of the most prolific upstream assets globally.

Other aspects of the company's story include the largest global refining operations, substantial chemicals assets and a dividend history and credit profile that are second to none in the space.

ExxonMobil's capital spending discipline is quite aggressive.

The company has a plan in place to allocate significant proportion of its budget to key oil and gas projects.

The company's business perspective looks different from most peers since big oil rivals have pledged to lower carbon emissions to tackle climate change. ExxonMobil divides its operations into three main segments: Upstream, Downstream and Chemical.

Barchart Technical Opinion

The Barchart Technical Opinion rating is a 56% Buy with a Weakening short term outlook on maintaining the current direction.

Long term indicators fully support a continuation of the trend.

Implied volatility is at 34.59% compared to a 12-month low of 17.68% and a 12-month high of 36.53%. 

Exxon Mobil rates as a Strong Buy according to 14 analysts with 1 Moderate Buy rating, 12 Hold ratings and 1 Strong Sell rating.

Low beta stocks such as Exxon Mobil are a common component of most investment portfolios and now you know how to generate an extra income from your XOM position.

Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.