Options traders pricing in Exxon dividend cut, analyst says

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Options traders appear to be betting on a dividend cut at Exxon Mobil (NYSE:XOM), Susquehanna Financial analyst Christopher Jacobson says, according to Barron’s.

“After comparing the theoretical future stock price to the market-implied one, it appears as if the options are currently pricing in the potential for notable dividend cuts and are pricing in around $0.97 in cumulative dividends between now and mid-April, notably below the about $1.74 we would expect in the absence of any action,” Jacobson writes.

His estimate is very rough, Jacobson says: It does not include the potential that traders expect to exercise the options early, and it does not include other calculations such as making adjustments to determine the present value of the future dividends.

Jacobson says rather than focus too much on the $0.97 estimate, he is seeking to “illustrate that the options are already pricing in the potential for notable dividend cuts in the months ahead.”

Exxon committed to maintaining its current dividend during its latest earnings conference call, planning to cut operating expenses further and defer expenses where possible.