XLE Long Call Spread

Hey! Who took my sell off? After waking up yesterday to a nice 50-point drop in /ES on the news of the “off” part of the “on again/off again” US-China trade relationship, it chugged back up as it looked like the two were “on” again. But as of last night, /ES was back down on reports of higher US tariffs later this week. Hope springs eternal for us bears. If that isn’t enough global excitement, the US is sending some big-ass ships and bombers to a wet part of the Middle East to keep any Iranian mischief down. That helped prop up /CL, which has sold off nicely in the last couple of weeks. XLE, the giant oil company ETF, has dropped over 6% in the last 10 days, too, and while its IV has increased a bit, its IV rank is still only 20%. If you think oil might rally and help pull XLE up, you might consider a long call spread for a bullish strategy. The long call vertical that’s long the 63 call and short the 65 call in the June expiration with 52 DTE is a bullish strategy with a 65% prob of making 50% of its max profit before expiry.

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