Quick-fire Survey!

🕒 Market Overview: I am bullish on the oil services sector and the OIH ETF as technical and fundamental factors have aligned.

📈 Sector Insight: Technically, OIH could have significant upside potential, given the recovery in oil prices, the potential for geopolitical turmoil in the Middle East, and U.S. energy policy that supports fossil fuel production and consumption. The top end of the vertical bull call spread at $520 per share is substantially below the next technical resistance level of $597.20 per share.

💡 Today's Trade Idea: Bull Call Spread on OIH.

SMART TRADE IDEA 💡

Bull Call Spread on OIH

Trade Setup: Buy $450 Call / Sell $520 Call, January 15, 2027, expiration.

Cost: $15.00 or lower ($1,500 per spread)

Max Profit: $55.00 ($5,500 per spread)
Breakeven: $465.00 on OIH on January 15, 2027
Risk-reward: 1:3.67

Management Plan: Take profits, or roll up if OIH reaches $500 per share or more before January 15, 2027.

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

Is the OIH ETF About to Catch a Strong Bid?

The case for higher highs in oil services stocks includes:

U.S. energy policy favors increased U.S. oil and gas production and consumption.

Extracting more fossil fuels from the Earth’s crude requires more oil services.

U.S. and Saudi cooperation on geopolitical and economic issues.

The potential for trade deals between the U.S. and China could boost China’s economy, leading to rising demand for traditional energy.

Robust earnings for the leading U.S. oil services companies.

I am bullish on the oil services sector and the OIH ETF. 

Technically, OIH could have significant upside potential, given the recovery in oil prices, the potential for geopolitical turmoil in the Middle East, and U.S. energy policy that supports fossil fuel production and consumption.

Source: Barchart

The quarterly chart highlights that OIH could have considerable upside potential, despite the 477.8% gain since Q1 2020. The chart shows that the next upside target is the 2018 high of $597.30 per share. Above there, OIH traded to a high of $1,160.20 in Q3 2014. Technical support is at the Q2 2025 low of $191.21 per share.

At $384.54 per share, OIH had $2.33 billion in assets under management. OIH trades an average of over 779,000 shares per day and charges a 0.35% management fee. The annual $4.87 dividend yields 1.27%, paying for the expense ratio in just over one quarter.

The top holdings of the OIH ETF include:

Source: Barchart

OIH’s exposure to the three leading oil services companies, Schlumberger (SLB), Baker Hughes (BKR), and Halliburton (HAL), is currently over 39.9% of its AUM.

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