Options Know-How: Exxon Mobil, Tesoro

How much do you know about playing the stock market with options?

The following are the latest options insights and ideas from TheStreet.com.

From Mad About Options: Exxon Out of Gas (Video):

Jud Pyle and Matt Buckley review Jim Cramer's recent short-term bearish comments about Exxon Mobil (XOM Quote) and offer options strategies for traders and investors. The Mad About Options crew also breaks down options ideas for Office Depot (ODP Quote) and Evergreen Solar (ESLR Quote).

Pyle: "Look at the October 95-80 put spread. Buy it for $8.10. Your breakeven: $86.90 or lower... Now, what's the max gain? $6.90 Why? It's a $15 put spread -- you're buying the 95 put, you're selling the 80 strike put -- the most it can be worth is 15. You're paying 8.10 for it. 15 minus 8.10 is $6.90. That's an 85% return -- 6.90 divided by 8.10... You can lose 100%. Got to be very careful about that... It's a very levered play."

To watch the video, click the player below:

From Dykstra: One-Upping the Competition:

It would be nearly impossible to pick options that skyrocket and turn in massive victories almost every time. That would be particularly hard when facing markets like the current one, which is full of pain. That's just a fact, and there is no way around it.

However, grabbing $1,000 victories by identifying companies that are undervalued and ready for a bounce is something that is both manageable and that makes sense. We don't need to find a stock that will increase 20%, 30%, or 50% in the long-term. We just need to find one that has found a bottom or will find a bottom soon and ride it on the bounce.

For picks where we are off with our timing a little bit, we can still capture a victory even if the price falls. All we have to do is average down, which is essentially adding more contracts at a lower price to lower our average entry price and making our sale target lower. If you need proof, take a look at the win I had with Tesoro (TSO Quote) earlier in the year. We averaged down a few times for a $4,800 win. In the end, this company didn't dominate. In fact, at the time we unloaded our contracts, the common stock price was lower than it was at the time of our first buy. Right there is the power of my system.

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