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Despite Occidental losing 60 percent of its value, traders are betting big on a rebound in the share price.

Despite Occidental losing 60 percent of its value, traders are betting big on a rebound in the share price, according to CNBC.

Oil was decimated by the coronavirus pandemic as work-from-home policies were implemented. Occidental Petroleum was one of the hardest-hit names in the sector. Berkshire Hathaway completely liquidated its position in the company. However, traders are betting against the oracle of Omaha once again.

“About 8,000 by 12,000 of the [November] 16 and 20-strike calls traded respectively for [a net price of] about 60 cents per contract,” Michael Khouw, chief investment officer at Optimize Advisors, said Monday.

This amounts to about $475,000 in premium. The spread breaks even around $16.60 per share. The stock would need an 18 percent rally to reach that point.

“I think when we look at this situation, obviously the stock’s in dire trouble, it’s been behaving very badly. It’s possible that buyers of calls here are speculating now that some of that selling pressure has been lifted because Buffett has exited his position, and there may be some upside,” said Khouw. 

Occidental shares were up 29 basis points at the close on Monday.

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