Oneok's Sudden Slide: What's Behind the 3.19% Drop and What's Next?

Summary
• Oneok (OKE) plunges 3.19% to $80.64, breaching its 50-day SMA of $81.97
• Institutional buying spree in Q1 adds $5.5M in new stakes, yet short-term bearish momentum emerges
• Analysts remain bullish on $103.07 price target, but Q2 earnings miss risks undermining confidence
The natural gas sector faces a pivotal summer as Oneok's shares tumble amid mixed fundamentals. With the stock trading at its lowest since March 2023, market participants are scrambling to interpret diverging signals from technical indicators, earnings performance, and sector-specific challenges. As the stock approaches its 200-day SMA at $90.06, the interplay between institutional confidence and short-term volatility will test investor resolve.

Earnings Disappointment and Sector-Wide Storage Pressures
The sharp decline in Oneok's shares stems from a confluence of factors. The company's Q1 earnings report revealed a $0.24 per share miss against $1.28 estimates, while revenue fell $1.74 billion short of $8.23 billion projections. Compounding this, the natural gas sector faces structural challenges highlighted in recent industry reports. Storage capacity growth has stagnated at 0.1% annually since 2014, creating a mismatch with rising demand for gas-powered data centers and manufacturing. This sector-wide pressure is amplified by the recent Zacks Earnings ESP of -13.38% for CNX Resources, a key peer in the space.

Gas Distribution Sector Navigates Storage Innovations Amid Mixed Momentum
The Gas Distribution sector is experiencing divergent trends as companies adapt to storage constraints. While Oneok's shares face downward pressure, the sector as a whole is investing heavily in LNG storage solutions. Notably, Tenaska recently secured $4.4 GW supply contracts for an AI campus, demonstrating continued demand for natural gas infrastructure. However, the sector leader D is trading lower by 0.21%, signaling broader caution. This contrast between innovative capacity expansion and near-term earnings pressures creates a complex environment for investors.

Strategic Options Plays Amid Technical Divergence
• 200-day average: 94.09 (far above) • RSI: 57.61 (neutral) • MACD: -0.213 (bearish) • Bollinger Bands: 79.19-83.10 (current price near lower band)
The technical picture shows a stock struggling to maintain its short-term bullish trend while battling long-term bearish pressure. With 18.9M shares traded (0.3% turnover rate), liquidity remains robust for options strategies. Two contracts stand out:
• OKE20250815P80 (Put, $80 strike, 8/15 expiry):
- IV: 33.57% (moderate volatility)
- LVR: 31.63% (high leverage)
- Delta: -0.445 (moderate sensitivity)
- Theta: -0.0509 (significant time decay)
- Gamma: 0.0545 (responsive to price changes)
- Turnover: 63,239 (high liquidity)
This put option offers amplified downside exposure as the stock approaches critical support levels. Under a 5% downside scenario to $76.61, payoff would be $3.39 per contract.
• OKE20250815C85 (Call, $85 strike, 8/15 expiry):
- IV: 26.88% (reasonable volatility)
- LVR: 100.81% (high leverage)
- Delta: 0.242 (modest sensitivity)
- Theta: -0.0331 (moderate time decay)
- Gamma: 0.0539 (price responsive)
- Turnover: 43,147 (strong liquidity)
This call provides leveraged upside potential if the stock breaks above its 50-day SMA. A 5% rebound to $84.67 would yield $0.67 per contract.
For ETF exposure, consider XLF (Financial Select Sector SPDR) as a correlated play given the sector's infrastructure nature. Aggressive bulls may initiate a bull call spread using the $85 strike, while bears should watch for a breakdown below $79.19.

Backtest Oneok Stock Performance
The backtest of OKE's performance after a -3% intraday plunge shows favorable short-to-medium-term gains. The 3-Day win rate is 56.46%, the 10-Day win rate is 62.12%, and the 30-Day win rate is 67.08%. While the maximum return during the backtest period was only 7.60% over 30 days, the overall trend suggests that OKE tends to recover and even exceed its pre-plunge levels in the following days.

Critical Juncture: Watch for $79.19 Support or Sector Leader Breakout
The coming weeks will test Oneok's ability to stabilize its share price as it approaches key support levels. With the stock trading at a 24% discount to its 52-week high of $118.07, the immediate focus should be on whether it can hold above the Bollinger Band lower boundary of $79.19. Technical indicators suggest a potential reversal could emerge if the stock closes above its 50-day SMA of $81.97, but this would require a 1.6% daily rebound. Meanwhile, the sector leader D's -0.21% move serves as a cautionary signal for broader market sentiment. Investors should prioritize risk management with stop-loss levels near $78.50 while monitoring the August 4 earnings report for potential catalysts.