Marathon Petroleum Options Contract Analysis
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 22 hours ago
0mins
Source: NASDAQ.COM
- Put Option Appeal: The current bid for the $260 put option is $43.20, and if an investor sells-to-open this contract, they commit to buying shares at $260, effectively lowering their cost basis to $216.80, which is approximately a 2% discount compared to the current price of $266.43, making it attractive for those interested in MPC stock.
- Yield Potential Analysis: Should the put option expire worthless, it would yield a 16.62% return on the cash commitment, or 8.54% annualized, indicating that this strategy is appealing in the current market environment, especially with an implied volatility of 38%.
- Call Option Returns: The current bid for the $300 call option is $45.00, and if an investor buys MPC shares at $266.43 and sells this call, they could achieve a total return of 29.49% if the stock is called away at the June 2028 expiration, highlighting the potential profitability of this strategy.
- Risk-Reward Trade-off: The $300 call option represents a 13% premium over the current stock price, with current analytical data suggesting a 47% chance of the contract expiring worthless, allowing investors to retain both their shares and the premium collected, thus enhancing their investment returns.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MPC?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MPC
Wall Street analysts forecast MPC stock price to fall
14 Analyst Rating
9 Buy
5 Hold
0 Sell
Moderate Buy
Current: 268.990
Low
184.00
Averages
201.50
High
213.00
Current: 268.990
Low
184.00
Averages
201.50
High
213.00
About MPC
Marathon Petroleum Corporation is an integrated, downstream, and midstream energy company. The Company's segment includes Refining & Marketing, Midstream and Renewable Diesel. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States. The Midstream segment gathers, transports, stores and distributes crude oil, refined products, including renewable diesel, and other hydrocarbon-based products principally for the Refining & Marketing segment via refining logistics assets, pipelines, terminals, and others. The Renewable Diesel segment processes renewable feedstocks into renewable diesel, markets renewable diesel and distributes renewable products through its Midstream segment and third parties. It sells renewable diesel to wholesale marketing customers, to buyers on the spot market and through long-term supply contracts with dealers who operate locations under the ARCO brand.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Marathon Petroleum Options Contract Analysis
- Put Option Appeal: The current bid for the $260 put option is $43.20, and if an investor sells-to-open this contract, they commit to buying shares at $260, effectively lowering their cost basis to $216.80, which is approximately a 2% discount compared to the current price of $266.43, making it attractive for those interested in MPC stock.
- Yield Potential Analysis: Should the put option expire worthless, it would yield a 16.62% return on the cash commitment, or 8.54% annualized, indicating that this strategy is appealing in the current market environment, especially with an implied volatility of 38%.
- Call Option Returns: The current bid for the $300 call option is $45.00, and if an investor buys MPC shares at $266.43 and sells this call, they could achieve a total return of 29.49% if the stock is called away at the June 2028 expiration, highlighting the potential profitability of this strategy.
- Risk-Reward Trade-off: The $300 call option represents a 13% premium over the current stock price, with current analytical data suggesting a 47% chance of the contract expiring worthless, allowing investors to retain both their shares and the premium collected, thus enhancing their investment returns.
See More
MPLX LP: A Robust Choice for High-Yield Stocks
- Stable Dividend Yield: MPLX LP boasts a 7.3% dividend yield, supported by long-term contracts with Marathon Petroleum that ensure predictable cash flows, providing a stable return for income investors and enhancing its appeal in the energy sector.
- Strategic Acquisition Focus: Last year, MPLX made three acquisitions while divesting its Rocky Mountain business, honing its focus on the Marcellus and Permian shale regions, which not only optimizes its business structure but also strengthens its competitive position in the natural gas liquids market, projected to grow at 7.1% by 2035.
- Dividend Growth Potential: MPLX announced a 12.5% dividend increase last year, raising the annual distribution to $4.31 per share, with nearly a tenfold growth over the past 11 years, and is targeting a continued 12.5% growth rate through 2027, indicating strong long-term growth potential.
- Financial Stability: With a debt-to-equity ratio of 1.8 and $5 billion in liquidity, MPLX can fund nearly two years of spending, while generating $549 million in free cash flow in Q1, leading to a distribution coverage ratio of 1.3, ensuring the safety and sustainability of its dividends.
See More
MPLX: A Steady High-Dividend Energy Stock
- Dividend Growth Potential: MPLX boasts a 7.3% dividend yield and plans a 12.5% increase in distributions by 2027, indicating the company's commitment to providing stable cash flow and attractiveness for long-term investors.
- Acquisition Strategy Optimization: Last year, MPLX made three acquisitions focusing on the Marcellus and Permian regions, enhancing its competitiveness in the natural gas liquids market, which is expected to drive future revenue growth.
- Financial Stability: With a debt-to-equity ratio of 1.8 and $5 billion in liquidity, MPLX can support nearly two years of spending, ensuring the sustainability and safety of its dividends.
- Optimistic Market Outlook: The North American natural gas liquids market is projected to nearly double by 2035 at a compound annual growth rate of 7.1%, and MPLX's positioning in this sector will support long-term share price appreciation.
See More
Gasoline Inventories Tighten, Keeping Prices Elevated
- Current Gas Prices: The average U.S. gasoline price stands at $3.83 per gallon, down from $4.29 a month ago but still significantly higher than last year, indicating that consumers are facing elevated costs at the pump despite falling crude prices.
- Refinery Operations: U.S. refiners are operating at maximum capacity, leading to tight gasoline supplies that prevent the quick conversion of cheaper crude into finished gasoline, thereby keeping retail prices high and reflecting a supply-demand imbalance in the market.
- Geopolitical Risks: Croft noted that ship traffic through the Strait of Hormuz remains below normal levels, averaging about 40 vessels per day compared to over 100 pre-tension, suggesting that geopolitical uncertainties may continue to impact energy prices.
- Market Outlook: Croft believes that mid-August will be a critical turning point for energy prices, contingent on shipping activity through the Strait of Hormuz, the progress of nuclear negotiations, and whether refinery utilization and gasoline inventories begin to normalize.
See More
Marathon Petroleum Surpasses Colgate in Market Cap
- Market Cap Comparison: Marathon Petroleum Corp. (MPC) boasts a market cap of $74.64 billion, surpassing Colgate-Palmolive Co. (CL) at $73.56 billion, indicating MPC's relative strength which may attract more investments from large funds.
- Investor Misconception: Many novice investors mistakenly compare stock prices to assess company value, but market capitalization provides a more accurate evaluation, aiding investors in making informed decisions.
- Market Impact: MPC's market cap positions it higher in the S&P 500 index, potentially influencing its selection by large mutual funds and ETFs, which in turn can affect its stock price performance.
- Stock Performance: As of Wednesday's close, MPC shares rose approximately 3.6%, while CL increased by about 0.9%, demonstrating MPC's strong market performance, which may further solidify its market position.
See More
US Stocks Rebound as Tech Shares Benefit from AI Demand
- Market Rebound: The S&P 500 Index rose by 0.72%, the Dow Jones Industrial Average increased by 0.82%, and the Nasdaq 100 Index climbed by 0.50%, indicating a recovery from Tuesday's sharp selloff as investors look to Micron Technology's earnings report to assess AI market performance.
- Micron Technology Gains: Micron's stock has surged over 260% this year, positioning the company as a major beneficiary of the soaring demand for AI infrastructure, which has attracted significant investor interest and reflects its strong market position.
- Housing Bill Impact: The passage of the 21st Century Road to Housing Act by Congress has led to gains for homebuilders and building suppliers, with KB Home and Builders Firstsource rising over 16% and 11% respectively, highlighting the positive impact of policy support on the industry.
- Crude Oil Price Drop: WTI crude oil prices fell more than 4% to a 3.5-month low, lowering inflation expectations and boosting stock markets, particularly benefiting airline and cruise line stocks due to reduced fuel costs, demonstrating the influence of energy market fluctuations on the broader economy.
See More
Marathon Petroleum Options Contract Analysis
- Put Option Appeal: The current bid for the $260 put option is $43.20, and if an investor sells-to-open this contract, they commit to buying shares at $260, effectively lowering their cost basis to $216.80, which is approximately a 2% discount compared to the current price of $266.43, making it attractive for those interested in MPC stock.
- Yield Potential Analysis: Should the put option expire worthless, it would yield a 16.62% return on the cash commitment, or 8.54% annualized, indicating that this strategy is appealing in the current market environment, especially with an implied volatility of 38%.
- Call Option Returns: The current bid for the $300 call option is $45.00, and if an investor buys MPC shares at $266.43 and sells this call, they could achieve a total return of 29.49% if the stock is called away at the June 2028 expiration, highlighting the potential profitability of this strategy.
- Risk-Reward Trade-off: The $300 call option represents a 13% premium over the current stock price, with current analytical data suggesting a 47% chance of the contract expiring worthless, allowing investors to retain both their shares and the premium collected, thus enhancing their investment returns.
See More
MPLX LP: A Robust Choice for High-Yield Stocks
- Stable Dividend Yield: MPLX LP boasts a 7.3% dividend yield, supported by long-term contracts with Marathon Petroleum that ensure predictable cash flows, providing a stable return for income investors and enhancing its appeal in the energy sector.
- Strategic Acquisition Focus: Last year, MPLX made three acquisitions while divesting its Rocky Mountain business, honing its focus on the Marcellus and Permian shale regions, which not only optimizes its business structure but also strengthens its competitive position in the natural gas liquids market, projected to grow at 7.1% by 2035.
- Dividend Growth Potential: MPLX announced a 12.5% dividend increase last year, raising the annual distribution to $4.31 per share, with nearly a tenfold growth over the past 11 years, and is targeting a continued 12.5% growth rate through 2027, indicating strong long-term growth potential.
- Financial Stability: With a debt-to-equity ratio of 1.8 and $5 billion in liquidity, MPLX can fund nearly two years of spending, while generating $549 million in free cash flow in Q1, leading to a distribution coverage ratio of 1.3, ensuring the safety and sustainability of its dividends.
See More
MPLX: A Steady High-Dividend Energy Stock
- Dividend Growth Potential: MPLX boasts a 7.3% dividend yield and plans a 12.5% increase in distributions by 2027, indicating the company's commitment to providing stable cash flow and attractiveness for long-term investors.
- Acquisition Strategy Optimization: Last year, MPLX made three acquisitions focusing on the Marcellus and Permian regions, enhancing its competitiveness in the natural gas liquids market, which is expected to drive future revenue growth.
- Financial Stability: With a debt-to-equity ratio of 1.8 and $5 billion in liquidity, MPLX can support nearly two years of spending, ensuring the sustainability and safety of its dividends.
- Optimistic Market Outlook: The North American natural gas liquids market is projected to nearly double by 2035 at a compound annual growth rate of 7.1%, and MPLX's positioning in this sector will support long-term share price appreciation.
See More
Gasoline Inventories Tighten, Keeping Prices Elevated
- Current Gas Prices: The average U.S. gasoline price stands at $3.83 per gallon, down from $4.29 a month ago but still significantly higher than last year, indicating that consumers are facing elevated costs at the pump despite falling crude prices.
- Refinery Operations: U.S. refiners are operating at maximum capacity, leading to tight gasoline supplies that prevent the quick conversion of cheaper crude into finished gasoline, thereby keeping retail prices high and reflecting a supply-demand imbalance in the market.
- Geopolitical Risks: Croft noted that ship traffic through the Strait of Hormuz remains below normal levels, averaging about 40 vessels per day compared to over 100 pre-tension, suggesting that geopolitical uncertainties may continue to impact energy prices.
- Market Outlook: Croft believes that mid-August will be a critical turning point for energy prices, contingent on shipping activity through the Strait of Hormuz, the progress of nuclear negotiations, and whether refinery utilization and gasoline inventories begin to normalize.
See More
Marathon Petroleum Surpasses Colgate in Market Cap
- Market Cap Comparison: Marathon Petroleum Corp. (MPC) boasts a market cap of $74.64 billion, surpassing Colgate-Palmolive Co. (CL) at $73.56 billion, indicating MPC's relative strength which may attract more investments from large funds.
- Investor Misconception: Many novice investors mistakenly compare stock prices to assess company value, but market capitalization provides a more accurate evaluation, aiding investors in making informed decisions.
- Market Impact: MPC's market cap positions it higher in the S&P 500 index, potentially influencing its selection by large mutual funds and ETFs, which in turn can affect its stock price performance.
- Stock Performance: As of Wednesday's close, MPC shares rose approximately 3.6%, while CL increased by about 0.9%, demonstrating MPC's strong market performance, which may further solidify its market position.
See More
US Stocks Rebound as Tech Shares Benefit from AI Demand
- Market Rebound: The S&P 500 Index rose by 0.72%, the Dow Jones Industrial Average increased by 0.82%, and the Nasdaq 100 Index climbed by 0.50%, indicating a recovery from Tuesday's sharp selloff as investors look to Micron Technology's earnings report to assess AI market performance.
- Micron Technology Gains: Micron's stock has surged over 260% this year, positioning the company as a major beneficiary of the soaring demand for AI infrastructure, which has attracted significant investor interest and reflects its strong market position.
- Housing Bill Impact: The passage of the 21st Century Road to Housing Act by Congress has led to gains for homebuilders and building suppliers, with KB Home and Builders Firstsource rising over 16% and 11% respectively, highlighting the positive impact of policy support on the industry.
- Crude Oil Price Drop: WTI crude oil prices fell more than 4% to a 3.5-month low, lowering inflation expectations and boosting stock markets, particularly benefiting airline and cruise line stocks due to reduced fuel costs, demonstrating the influence of energy market fluctuations on the broader economy.
See More
