Mike Khouw's Energy Select Sector SPDR (ETF) (XLE) Trade
Carter Worth thinks that investors are probably going to start selling XLE, because it had such a great, uninterrupted rising trend. He also thinks that it is close to its resistance price.
Mike Khouw suggested a trading strategy that is only mildly bearish, and it is going to be profitable even if the stock stays at its current levels. He wants to sell the April 78 calls for $2.35, and buy the April 82 calls for $0.85. This trade would help him to collect $1.50, and that is 37.5% of the difference between strikes.
Dan Nathan and Scott Nations commented that they don't like this trade. Dan Nathan doesn't like the risk - reward ratio, and Scott Nations is not bearish on XLE.
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