Ironically, the U.K. — BP's home nation — was the only outlier among the four countries surveyed, with respondents reporting becoming more progressive. Be that as it may, BP has bills to pay and so it is simply following the money.

Math Is Also Making BP Stock Great Again

While narratives provide important color and context for publicly traded companies, they are functionally useless for options traders. If we're looking at BP stock, we can't just trade the news. The headlines have already been digested, meaning that the institutional players have already incorporated the key line items into their risk-assessment models.

To have an edge, we must think differently about the market and turn to a metric that very few (if any) consider: objective truth.

What you see in standard financial analyses — whether of the fundamental or technical variety — generally wouldn't be considered objective truth. Metrics such as share price or earnings are measurements of value. But there is no objective standard to determine what a "good price" is or what "bad earnings" means. These terms are relative assertions and if analysts are not careful, they risk propagating presuppositional fallacies.

So, what is the objective truth of BP stock? In the trailing two months, the security is printing four up weeks and six down weeks, with an overall upward trajectory across the 10-week period. For simplicity, the sequence can be abbreviated as 4-6-U.

At first, this compression of price magnitude seems incredibly stupid. But let's really think about what we're saying here. In the past 10 weeks (including the current one), the market was a net buyer of BP stock four times and a net seller six times.

We now have an objective, falsifiable categorization of BP's pricing dynamics. By conducting this conversion exercise (going back to January 2019), we can extract a demand profile of the oil giant:

Here's the fun science part. If we assume no mispricing of BP stock — the null hypothesis — then the chance that a long position will rise on any given week is only 45.03%. For whatever reason (perhaps because of the aforementioned initial green energy focus), BP ordinarily suffers a negative bias.

At this moment, though, the casino is giving us the hand of the 4-6-U sequence. If we grant the statistical viability of this sequence (more on that below), then the success rate of a one-week long position rises to 62.07%. That's obviously an advantage to the bullish speculator.

The best part? Hardly anybody thinks this way because the religion of fundamental and technical analysis is so comforting. But if you can open your eyes — if you take the red pill — there's an entire ecosystem of analytics that's waiting to be explored.

Using Hard Data To Trade

Based on past analogs and assuming that the bulls can control the market for the next two to three weeks, BP stock would be on course to reach $33.75, perhaps up to $34 given its psychological importance. With this in mind, a tempting idea is the 32.50/34.00 bull call spread expiring Aug. 15.

The above transaction involves buying the $32.50 call and simultaneously selling the $34 call, for a net debit paid of $71 (the most that can be lost in the trade). But if BP stock rises through the short strike price ($34) at expiration, the maximum reward is $79, a payout of over 111%. To note, the breakeven price is $33.21.

But how trustworthy is the aforementioned 4-6-U sequence? Running a one-tailed binomial test reveals a p-value of 0.0507, colloquially translating to a nearly 95% confidence level. If we round up from 94.93%, then yes, this is a statistically significant sequence — the signal is "intentional" rather than random.

To be clear, a high confidence level does not guarantee a successful outcome in trading. But by running real analytics, we're focusing on more repeatable, more trustworthy patterns that are less likely to degrade over time.

In an open system like the stock market? I'd call that a win.

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