ConocoPhillips Plummets 4.5% on Workforce Cuts: What’s Brewing in the Energy Sector?

Summary
• ConocoPhillips (COP) slumps 4.5% to $94.50, its worst intraday drop since March 2021
• CEO Ryan Lance announces 20-25% workforce reduction amid $2B Q2 net income contraction
• S&P 500 Energy Index declines 2.1% as oil prices fall 11% year-to-date

ConocoPhillips’ sharp selloff has sent shockwaves through the energy sector, with shares plunging to a 52-week low of $94.34. The move follows a restructuring announcement that will cut 2,600–3,250 jobs, signaling a broader industry-wide cost-cutting trend. With oil prices under pressure and margin compression accelerating, investors are scrambling to assess the implications for energy majors.

Workforce Restructuring Sparks Sharp Selloff in ConocoPhillips Shares
ConocoPhillips’ 4.5% intraday decline is directly tied to its announcement of a 20-25% workforce reduction, a move CEO Ryan Lance described as necessary to combat rising costs and declining oil prices. The restructuring, dubbed 'Competitive Edge,' aims to cut $1 billion in costs this year, on top of $1 billion saved from the Marathon Oil acquisition. With controllable costs now at $13/barrel (up from $11 in 2021) and U.S. crude futures down 11% year-to-date, the market is punishing the stock for its margin vulnerability. The selloff mirrors similar moves at Chevron and BP, but COP’s 4.2% drop outpaces the sector’s 2.1% decline, reflecting investor skepticism about its cost-cutting efficacy.

Energy Sector Volatility Intensifies as ConocoPhillips Trails Sector Leader Exxon Mobil
While ConocoPhillips’ 4.5% drop is the most severe in the sector, Exxon Mobil (XOM) also fell 2.6% intraday, highlighting broader energy sector fragility. The S&P 500 Energy Index, down 2.1%, remains a laggard as oil prices struggle to recover. COP’s underperformance relative to XOM underscores its higher sensitivity to cost pressures and operational efficiency concerns. With both majors cutting jobs and capital spending, the sector’s near-term outlook hinges on oil price stabilization and cost discipline.

Options Playbook: Capitalizing on COP’s Volatility with Strategic Put Options
• RSI: 69.78 (overbought correction in progress)
• MACD: 1.27 (bullish divergence fading)
• Bollinger Bands: Price at 94.50 (near lower band at 91.40)
• 200D MA: 96.37 (price below key resistance)

COP’s technicals suggest a bearish near-term bias, with support at 93.88–94.01 (30D support) and resistance at 95.10–95.72 (200D support). The RSI’s overbought correction and MACD’s flattening histogram confirm momentum exhaustion. For traders, the COP20250912P94 and COP20250912P93 put options stand out:

• COP20250912P94 (Put, $94 strike, 9/12 expiry):
- IV: 26.45% (moderate)
- Leverage Ratio: 66.99%
- Delta: -0.4436 (sensitive to price drops)
- Theta: -0.0248 (slow time decay)
- Gamma: 0.0954 (high sensitivity to price swings)
- Turnover: 33,145 (liquid)
- Payoff at 5% drop (ST=89.78): $4.22 (4.5x leverage)
This contract offers high leverage and liquidity, ideal for a 5% bearish move.

• COP20250912P93 (Put, $93 strike, 9/12 expiry):
- IV: 26.67% (moderate)
- Leverage Ratio: 93.52%
- Delta: -0.3508 (moderate sensitivity)
- Theta: -0.0328 (moderate time decay)
- Gamma: 0.0889 (responsive to price swings)
- Turnover: 15,341 (liquid)
- Payoff at 5% drop (ST=89.78): $3.22 (3.5x leverage)
This option balances leverage and time decay, suitable for a mid-term bearish play.

Aggressive short-sellers should prioritize COP20250912P94 for its high leverage and liquidity. If COP breaks below 93.88, consider rolling into the COP20250912P93 for extended exposure.

Backtest Conocophillips Stock Performance

Act Now: COP’s Downside Risk Demands Tactical Positioning
ConocoPhillips’ selloff reflects a sector grappling with margin compression and oil price weakness. With COP trading below its 200D MA and RSI correcting from overbought levels, the near-term bias remains bearish. The COP20250912P94 and COP20250912P93 options offer strategic entry points for capitalizing on this volatility. Meanwhile, sector leader Exxon Mobil (XOM) at -2.6% underscores the broader energy sector’s fragility. Investors should monitor COP’s ability to hold above 93.88 and watch for a potential rebound in oil prices to assess the sustainability of this selloff. For now, tactical short positions and put options are warranted.