As oil rebounds following oversold conditions, it provides an opportunity for buyers to step in, especially with the potential for geopolitical tensions to rise. And one energy stock that looks set up to potentially break out is Phillips 66 (PSX) after largely trading in a range since February. If we examine the chart of PSX, it rallied over 60% from the Oct 2023 lows to April 2024, but recently pulled back into a range between $135 and $145 for the last couple of months. However, it is now just starting to break out from that trading range and starts to target the $170 highs as upside targets. Additionally, it has recently outperformed the S & P 500 and momentum has turned positive this week, adding to the bullish signal for a breakout. PSX trades at only 11 times forward earnings, which is discount to its peers despite expecting to grow EPS by 15% over the next couple of years. With a higher debt to equity ratio, PSX has a higher implied leverage than its peers, which provides a higher upside potential if oil prices recover from its recent pullback. The trade Options are on the expensive side so my preference is to sell contracts in this environment, especially with the CBOE Volatility Index at 17. I’m looking out Sept 6th expiration and selling the $147/140 Put Vertical at a $2.87 Credit. This entails: Sold Sept 6 $147 Puts @ $4.90 Bought Sept 6 $140 Puts @ $2.03 This strategy would risk a total of $413 per contract if PSX is below $140 at expiration, while potentially profiting $287 per contract if PSX stays its current price of $147. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.