Dan Deming's Energy Select Sector SPDR Trade

Dan Deming of KKM Financial spoke on Bloomberg Markets about a bullish options trade in Energy Select Sector SPDR XLE.

Deming believes the current move higher could continue and he wants to sell the March 55 put and buy the March 60/64 call spread. The trading structure allows him to collect $0.05 and if the stock moves above $60, the trade is going to make an additional profit. Its maximal profit is $4.05 and it can happen if the stock moves to $64 or higher. If Energy Select Sector SPDR drops below $55 at the March expiration, Deming is going to have to buy the stock and pay $55 for it.