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Dan Nathan Sees Unusual Options Activity In Energy Select Sector SPDR (ETF)


On CNBC's Options Action, Dan Nathan spoke about a bullish options activity in Energy Select Sector SPDR (ETF) (NYSE: XLE). He explained that call options outnumbered put options 3 to 1 on a day when the ETF traded 1.76 percent higher.

Nathan said that he noticed a large trade in XLE and he finds it a little bit speculative. A trader bought the December 90 call for $1.15, sold two December 95 calls for a total of $0.60 and bought the December 100 call for $0.08. The trader bought 10,000 contracts and paid $0.63 for the call butterfly and he will achieve maximal profit of $4.37 if XLE trades at $95 on December expiration.

XLE closed the session on Wednesday at $85.75, which is just above its long-term support of $85, said Nathan. He explained that it is a good idea to use a strategy like a call butterfly because implied volatility is high.


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