Geopolitical Turmoil Spurs ConocoPhillips Stock (COP) Bulls

Business Insider

17-07-2025

While upstream hydrocarbon giant ConocoPhillips (COP) represents a vital cog within the U.S. energy ecosystem, its underlying oil and gas exploration and production business has been gradually losing market favor in light of clean and renewable solutions. Since the start of this year, COP stock has declined by 5%, while over the past 52 weeks, it has fallen approximately 18%.
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Nevertheless, some changes could be in store. Since early June, COP stock has been steadily moving northward. Naturally, the upward trend can be linked to escalating tensions in the Middle East, which have raised serious concerns about the stability of global oil supply chains. However, ConocoPhillips has also benefited from a much more productive catalyst — strong support from President Donald Trump.
Throughout the campaign trail, Trump has repeatedly championed the hydrocarbon industry, particularly oil and gas. Therefore, when he signed the 'One Big Beautiful Bill Act,' the move came as no surprise to anyone paying even remote attention to American politics. Essentially, the new law rolls back much of the environmentally forward policies of the Biden and Obama administrations. Cynically, the paradigm-shifting decision should help boost ConocoPhillips' relevance.
Given that Trump will be in power for the next three years, long-term investors, including myself, have a justification for being Bullish on COP stock. Importantly, taking advantage of the current price action will require the use of COP stock options and a slightly unconventional approach to ascertaining the probability of near-term prices.
Laying the Foundation of Applied Game Theory
While it's important to understand the color and context of an investment prospect, for options traders, such narratives don't address the two key components necessary for an adequate thesis: magnitude projection (y-axis) and time frame (x-axis). Since all options eventually expire, it's not enough to be directionally confident; there must also be temporal integration.
Let's be practical: most market participants turn to financial publications not simply for general interest, but to gain clear, actionable insights—specifically, identifying promising opportunities and understanding the appropriate timing to act on them. Effectively addressing both elements often goes beyond traditional fundamental or technical analysis. In my view, this is where applied game theory becomes valuable, offering a structured, evidence-based framework to help determine not just what decisions to make, but when to make them.
However, one metric that creates confusion is the share price. As a continuous signal, the share price of any security is unbounded, meaning that it can theoretically go anywhere (with the apparent exception of negative prices). Such kinesis presents significant challenges for comparative studies, rendering statistical analysis extremely difficult, if not impossible.
A more forward-thinking approach involves compressing price discovery into market breadth, specifically, tracking sequences of accumulation and distribution sessions. Market breadth addresses the fundamental question: By the end of the day, was the market a net buyer or a net seller? By distilling data down to its core drivers, we can more effectively spot recurring patterns and the key moments when they begin to shift.
Putting Theory into Practice with COP Stock
Utilizing the above methodology for COP stock across 10-week intervals gives us the following demand profile:
In the trailing two months, COP stock has printed a 4-6-U sequence: four up weeks, six down weeks, with a positive trajectory across the 10-week period. It's a rare sequence, having only materialized nine times since January 2019. Much of its unusual nature centers on the balance of distributive sessions being greater than accumulative, yet the overall trajectory is positive.
What's really intriguing, though, is that in six cases of the 4-6-U flashing, the following week's price action resulted in upside, with a median return of 4.71%. During the three times that COP stock fell, the median loss was 3.37%. Armed with a higher probability of success and a greater performance magnitude, options traders are theoretically incentivized to consider bidding on this particular hand.
Formalizing COP's Market Sequences
It's worth pointing out that if the market were truly random, analyzing the above demand sequences wouldn't matter: the probabilities should coalesce around 50%. Yet that's not what's happening at all. Some hands — if we want to use gambling terms — clearly favor the bettor over others.
My thesis, then, is that the 4-6-U sequence is an intriguing idea to consider given that its chance of upside is nearly 67%. In contrast, the baseline probability (for a one-week-long position) is only 52.05% — that's game theory in action.
With this in mind, aggressive traders may want to consider the 95/97 bull call spread expiring on August 1st. This transaction involves buying the $95 call and simultaneously selling the $97 call, for a net debit paid of $97 (the maximum possible loss). Should COP stock rise through the short strike price of $97 at expiration, the maximum reward is $103, a payout of over 106%.
Is ConocoPhillips a Buy, Sell, or Hold?
Turning to Wall Street, COP stock carries a Strong Buy consensus rating based on 15 Buys, two Holds, and zero Sell ratings over the past three months. The average COP stock price target is $114.71, implying almost 24% upside potential over the coming year.
Betting on COP Stock's Potential Rise the Smart Way
While energy investors may appreciate the Trump administration's support of ConocoPhillips and the broader hydrocarbon ecosystem, this narrative alone doesn't really provide actionable insights for options traders, who require a multi-dimensional working thesis. To address this dilemma, we can apply the principles of game theory, identifying patterns and probabilistic projections for a more innovative near-term Bullish approach.