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Bill Baruch's XOP Option Trade

Bill Baruch's XOP Option Trade

On CNBC's "Options Action," Bill Baruch of Blueline Capital suggested investors should consider a risk reversal options strategy in SPDR S&P Oil & Gas Explore & Prod. (NYSE: XOP).

Baruch thinks the stock is going to reach a new low and he wants to sell the January $24/$22 call spread for 30 cents.

He will use the premium to finance the purchase of the January $19/$17 put spread. The trade is going to make money if the stock drops below $19. It can reach its maximal profit of $2 if the stock drops to $17 or lower.


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