XLE trade ideas
XLE seeing huge bullish flowI am not a believer in the energy pop in May idea that large money is chasing after here. I guess geopolitical risk could change that. Personally, I think more likely we break trend next couple weeks. I am not giving a bias till flow gives us a better tell.
XLE AccumulationLooks like classic accumulation for big run in energy. Looks like year of commodities getting prepared.
OPENING: XLE JULY 20TH 67 LONG/APRIL 27TH 71 SHORT CALL DIAGONAL... for a 3.14/contract debit (78.5% width of spread).
Another neutral to bullish assumption setup with plenty of time to reduce cost basis. Currently, it looks like you could get a better fill than I did (mid currently at 3.00, 75% of the width of the spread, which is what you're looking for in these setups).
Here, I'm shooting for 20% of what I put the trade on for.
Metrics:
Max Profit: .86/contract*
Max Loss: 3.14/contract
Theta: .37
Delta: 32.33
* -- Assuming no rolls of the short call and finish of the underlying above the short call strike at expiry.
** -- Assuming no rolls of the short call and finish of the underlying below the long call strike at expiry.
Bearish: Energy Sector testing major $67 support levelTraders have reacted to this $67 level since June 2017 and now being tested as support. Intraday it's been broken many times but look for a break below to continue lower to $64 and $62 targets.
XLELong via Jun15/Mar16 diagonal for $4.37
POP: 50%
Max Loss: $4.37
Stop Loss: Price at $64.40
Max win: As of right now, $263
Target: Price at $75
Long Jun15 $66 call: 61 delta
Short Mar16 $73 call: 14 delta.
I structured this trade to give me the most profit as close to my target as possible (in the case it shoots straight up), while still having a positive theta trade. For reference try to match the thetas of both options up for choosing a strike for your short.
I will continue to roll the short call each cycle to continue to eliminate basis as well.
XLE LONG OpportunityXLE (Developed Markets Energy Index) has recenly tested relative lows: support area withstanded the recent drawdown.
Long-term Fibonacci retracement level seems to provide further support.
This could be a good opportunity to enter a LONG trade, since support levels look strong enough and we have plenty of room above.
Entered @ 68.35
Stop Loss: Fibonacci support (-3.6% @ 65.88)
Target price: three times our risk (+10.8% @ 76.25)
Energy Select Sector ERY (short) / ERX (long)Possible Ascending Triangle here, let's see where it goes. Good luck.
Strangle on XLE (58% probability)With the strong move to the upside, I am betting that we are starting a new auction between 78 and the 71 levels. So with an Implied volatility Rank of 37, I sold a Strangle at the 30 deltas for a $1.36 credit. As long as the price stays between $78.35 and $71.65, we will be making money.
The Trade:
Short 73 Puts
Short 77 Calls
Credit $1.36 per contract
58% Probability of profit
