Bullish Options Trade On The Energy Stocks

Carter Worth talked

of Energy Select Sector SPDR (ETF)

. He said that when the crude oil traded more than 15% lower the energy stocks outperformed S&P 500 over the next 5 months. The energy stocks outperformed the S&P 500 0.41% one month after a such event, after 3 months the space was better than the broad index by 1.99% and in 5 months after a decline in crude oil it outperformed S&P 500 on average 2.63%. Mr. Worth has also showed the XLE chart and he pointed to four intermediate declines, similar by size and duration. The corrections were between 7% and 9.5% and it lasted between 22 and 32 days. The last correction is the smallest, only 7% and its duration is 32 days. After each correction XLE rebounded and Carter Worth thinks that it will bounce again. Mike Khouw suggested a bullish options strategy, based on Carter Worth's analysis. He would buy the December quarterly 95 call options for $4. The break even for this trade would be at $99. Dan Nathan would probably look to spread this trade and he added that he disagrees with the analysis. He thinks that the momentum is broken.