Oneok Plunges 5.5% on Earnings: What's Fueling the Midstream Sell-Off?

Summary
• Q2 revenue surges 61% to $7.89 billion, beating estimates by $199 million
• Final investment decision for $365M Delaware Basin gas plant announced
• Intraday price drops to 52-week low of $74.23 amid capital intensity concerns

Oneok (OKE) has plunged 5.48% intraday, trading at $75.45 as of 17:19 ET, after a mixed earnings report and aggressive capital allocation strategy triggered investor skepticism. The stock’s sharp decline from $78.99 to $74.23 reflects growing concerns over liquidity and margin pressures, despite record revenue and a new $365 million infrastructure project. With CAPEX surging 56% to $749 million and cash balances collapsing from $733 million to $97 million, the midstream operator faces a critical juncture.

Capital Intensity and Margin Pressures Overshadow Earnings Optimism
Oneok’s 5.48% intraday drop stems from a combination of earnings optimism and capital allocation skepticism. While Q2 revenue soared 61% year-over-year to $7.89 billion and adjusted EBITDA rose 22%, the stock reacted negatively to the $365 million Delaware Basin project and $749 million CAPEX increase. The company’s cash balance plummeted from $733 million to $97 million in six months, raising concerns about liquidity. Additionally, operating costs jumped 24% to $706 million, squeezing margins in the NGL and Refined Products segments. The market’s bearish shift reflects fears that aggressive growth may strain balance sheet flexibility.

Midstream Sector Fractured as Energy Transfer Trails Oneok's Sharp Decline
The midstream sector remains fragmented, with Energy Transfer (ET) down 1.15% as peers grapple with integration costs and capital discipline. While Oneok’s Q2 revenue growth outpaced ET’s 21.9% sales increase, the latter’s debt load ($29.63 billion) and interest expenses ($438 million) highlight shared challenges. The sector’s focus on OBBBA tax benefits and NGL export infrastructure contrasts with Oneok’s near-term capital intensity. However, Energy Transfer’s 16.4% operating income growth underscores divergent strategies in a market demanding both growth and fiscal prudence.

High-Leverage Puts and Calls for OKE's Volatile Outlook
• 200D MA: 93.37 (well below current price)
• RSI: 49.68 (neutral)
• MACD: -0.1965 (bearish), Signal Line: -0.0723
• Bollinger Bands: 83.61 (upper), 81.25 (middle), 78.89 (lower)

OKE’s technicals signal a short-term bearish bias, with support at $74.23 (52W low) and resistance at $81.25 (200D MA). The stock’s 5.36% drop suggests a potential test of key levels, making high-leverage options attractive. Two top options from the chain stand out:

• OKE20250815P75 (Put):
- Strike: $75, Expiry: 2025-08-15
- IV: 27.63% (moderate), Delta: -0.4217 (moderate sensitivity), Theta: -0.0768 (high time decay), Gamma: 0.1077 (high sensitivity to price moves), Turnover: $49,940
- Payoff (5% downside): $0.775 per share. This put offers 101.75% leverage, ideal for a bearish short-term bet.

• OKE20250919P75 (Put):
- Strike: $75, Expiry: 2025-09-19
- IV: 24.79% (low), Delta: -0.4450 (moderate sensitivity), Theta: -0.0305 (moderate time decay), Gamma: 0.0591 (moderate sensitivity), Turnover: $583,807
- Payoff (5% downside): $0.775 per share. This put’s high liquidity and 59.86% leverage make it a safer long-term bearish play.

Aggressive bulls may consider OKE20250815C75 (Call) for a bounce above $75, but the put options better align with the current bearish momentum.

Backtest Oneok Stock Performance
The -5% intraday plunge in ONEOK (Oklahoma Gas & Electric) likely had a significant impact on its subsequent performance. To understand the extent of this impact, we can analyze the stock's behavior after the plunge.1. Post-Plunge Performance: After the -5% intraday drop, ONEOK's stock would have likely experienced further volatility. The stock's reaction to the sudden decline would depend on various factors, including market sentiment, investor confidence, and the company's fundamentals.2. Short-Term Volatility: The stock might have continued to exhibit short-term volatility as traders reacted to the price movement. This could have led to increased trading volumes and potentially further price swings.3. Long-Term Impact: In the long term, the stock's performance would have been influenced by its ability to recover from the plunge. If the company's strong fundamentals and positive growth prospects outweighed the negative sentiment from the plunge, the stock could have rebounded. Conversely, if the plunge was triggered by negative news or a shift in market sentiment, the stock might have continued to face downward pressure.4. Dividend Yield Consideration: Given that ONEOK has a high dividend yield of 5.2%, investors might have been more inclined to hold the stock for its income rather than selling it following the price drop. This could have helped stabilize the stock's price to some extent.In conclusion, the -5% intraday plunge in ONEOK would have likely led to short-term volatility, but the long-term performance would have depended on a variety of factors, including the stock's ability to recover and the influence of its high dividend yield. Without specific historical data on the stock's behavior after such a plunge, this analysis is based on general financial principles and the information provided about ONEOK's characteristics.

Act Now: Position for OKE's Volatile Midstream Future
Oneok’s 5.48% intraday plunge underscores the market’s demand for balance between growth and fiscal discipline. With a $365 million project and $749 million CAPEX weighing on liquidity, investors must watch the $74.23 support level and $81.25 200D MA. The OKE20250815P75 put offers a high-leverage, high-gamma play for a potential breakdown. Meanwhile, Energy Transfer’s -1.15% move highlights sector-wide integration challenges. For those seeking directional exposure, the put options above provide a structured approach to OKE’s near-term volatility. Watch for a $75.55 retest or a breakdown below $74.23 to confirm the bearish thesis.