Joe Tigay's Energy Select Sector SPDR ETF Trade

Joe Tigay spoke on Bloomberg Markets about his trading strategy in Energy Select Sector SPDR (ETF) XLE.

He said crude oil has been trading between $50 and $55 lately and every time it drops close to $50, domestic supply decreases and the price moves higher. He believes crude oil could move higher from its current price level and he wants to set up a bullish strategy. He wants to buy Energy Select Sector SPDR (ETF) shares and sell the April $73 call for $1.40.

If the stock trades above $73 at the April expiration he would have to sell the stock, but his selling price would be $74.40. If the stock trades lower, the premium would give him some protection on the downside.