Trade Profitably On Cooling Energy Earnings

Oil and gas midstream firm Oneok OKE released earnings on Wednesday and the response was mixed. Shares have now dropped to near multi-year lows.

A long base could be in store for this stock before it holds structure and breaks upwards again.

That leads me to consider a leap call butterfly options trade to profit from this setup.

Here’s how you set this trade up for maximum gain.

The Long Call Butterfly Leap Explained 

A long call butterfly is the combination of a long call spread and a short call spread, where both share the same short strike and the same expiration date. The term “leap” means that we position the option well into the future, using a bullish position that gives us time to wait out the sideways churn ahead. 

The beauty of a leap butterfly is that time decay becomes largely irrelevant, so we can wait out the noisy bits in the market as we recover. 

Here are the trade details, positioned for upside:

• Buy to open 1 OKE 20Mar 2026 80 calls 
• Sell to open 2 OKE 20Mar 2026 100 calls 
• Buy to open 1 OKE 20Mar 2026 120 calls 

The long call butterfly holds a current debit of $4.90 at the time of writing, which represents the total risk incurred in the trade. The breakeven price of the stock at expiration on this trade is $84.90.

The total highest potential profit is $20 (the distance between 80 and 100) less the cost of the debit incurred by buying the call butterfly, so: $20 – $4.90 = $15.10 (less commissions). 

Note that it’s extremely rare to collect all this premium on a butterfly of this kind. Instead, I like to consider 40%-90% profit of the longer-term investment. 

ONEOK Key Chart Levels

Oneok’s relative resistance zone sits around $105, as I write this, but trading could be choppy for many months due to market uncertainty at this level. Set an alert for prices near this middle strike so that you are aware of the motion into the middle strike, as this is where the maximum profit will engage into expiration.

You will also notice that price action is less sensitive to fluctuation the further we are from expiration. The stock’s support sits near $70. 

Trade Management

This strategy provides several ways to exit the trade, but I will discuss the two main ones:

1. You can sell the call butterfly when the profit goal moves into your target parameters, particularly once the middle strike is tested near the expiration time. I often look for a 40%-90% return for these types of call butterflies with strikes deep in the money. 
2. To sell the call butterfly when your loss threshold is breached. Customarily, this is 50% for me. 

More advanced traders might consider rolling the short strikes down over time if the price continues to go up.

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