Dan Deming's Consumer Discretionary SPDR ETF Trade

Speaking on Bloomberg Markets, Dan Deming of KKM Financial recommended a bullish options strategy in Consumer Discretionary SPDR (ETF) XLY.

He thinks the consumer sector is going to continue to trade higher and he wants to use a risk reversal to make a bullish bet. Deming wants to sell the January 81 put and buy the January 83 call for a total credit of $0.20.

The trade starts to lose money below $80.80, which is 2.30 percent lower from the closing price on Tuesday. If Consumer Discretionary SPDR ETF stays between $81 and $83, Deming is going to collect the credit of $0.20 and if it trades above $83, he can make additional profit.