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Chris Kettenmann's Energy ETF Trade

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Chris Kettenmann, the chief energy strategist at Macro Risk Advisors, spoke on Bloomberg Markets about a bearish options strategy in Energy Select Sector SPDR (ETF) (NYSE: XLE).

He said that Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) are the largest constituents of the ETF and he sees them as yield instruments that pay very large dividends to investors. He added that he sees risk for the dividend payouts and risk for the earnings forecasts for these companies.

Kettenmann expects to see further downside for Energy Select Sector SPDR (ETF) and he wants to sell the December 70 call to fund the purchase of the December 60 put. The trade is going to be profitable if the stock drops below $60 at the December expiration, which is 10.86 percent lower from the closing price on Friday. If the stock closes above $70 or more than 4 percent higher, the trade is going to make a loss.

Posted-In: Bloomberg Markets Chris KettenmannOptions Markets Media ETFs

 

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