Is ConocoPhillips Stock Worth Buying Here? - Shorting COP Puts and Credit Spreads are Better Plays

Oil futures have been rising, but recently hit a peak. ConocoPhillips (COP) reported strong Q2 earnings on Aug. 6, and COP stock may be fairly valued. However, shorting COP puts and vertical put credit spreads are attractive alternatives for value investors.

COP closed at $137.35 on Friday, Sept. 11, a recent three-, six-, and 12-month peak. That followed WTI Oct. futures contract ( CLV26 ) spiking above $104 late Thursday, Sept. 10.

The market clearly believes that Conoco's Q3 earnings and cash flow will be strong, given how high oil and gas prices have been this quarter. Barchart's CLV26 chart below shows the recent peak in oil futures.

Oil has been rising due to ongoing tensions and kinetic action between the U.S. and Iran, as well as in other areas in the Middle East where oil is transported.

This follows its strong Q3 earnings and cash flow report on Aug. 6. In Q3, Conoco generated 2,248 million barrels of oil equivalent per day (MBOED), 4.1% below last year's 2,346 MBOED .

However, it was higher than its prior guidance of 2,185 MBOED to 2,215 MBOED, as I described in my last Barchart article on ConocoPhillips (July 27).

Moreover, for all of 2026, it's guiding for higher production: 2.295 to 2.325 MBOED. That could push the stock higher.

Conoco is generating enough to cover its basic requirements. For example, its Q2 operating cash flow was $7.2 billion, and $11.7 billion in the first half. That was more than enough to cover dividend payments so far this year of $2.0 billion, $3.0 billion in buybacks, and $6.0 billion in capex (i.e., $11.0 billion total outflows).

COP Could Be Fairly Valued to Undervalued

Moreover, management reiterated its guidance for 2026, and analysts now forecast 2026 revenue of $72.58 billion and $10.63 in earnings per share (EPS).

That means COP, at $137.35, COP is trading at a forward price/earnings (P/E) metric of 12.92x. That is at the upper end of its 5-year P/E range, according to Seeking Alpha (12.38x).

However, COP stock's implied volatility (IV) is low at just 31.25%, according to Barchart. Its IV Percentile is only 41%, meaning only 41% of the time over the past year has IV been lower. That makes it attractive to buyers of stocks with low IV Percentiles who believe IV could rise.

In addition, analysts still have higher price targets for COP. For example, Yahoo! Finance's analyst survey has a $145.44 price target, and Barchart's mean survey PT is $147.12 . These PTs are +6.50% higher than Friday's close (using the midpoint of both PTs).