Update (1): $XLU long-term bullishSTC all my XLU 2019 calls. I still have 2020 calls in hand.
Looks like a good place to consolidate.
Will buy more leaps when then pulls back.
XLU trade ideas
THE WEEK AHEAD: XLU, XRT, EEM, FXI DIRECTIONALS, EWZ PREMIUMWith volatility at somewhat of an ebb here, I'm eyeing exchange-traded funds for directional plays in lieu of just hand sitting.
The setup pictured here is of a XLU diagonal with the long dated option out in Dec, the front month in August. I would prefer setting this up as a skip month (Aug/Oct), but an Oct expiry isn't available yet. Here are the metrics: 5.43/contract debit, max profit on setup 1.57/contract, break even at 49.43 vs. 49.54 spot, debit paid/spread width ratio 77.6%. The debit paid/spread width ratio is a little higher than I'd ordinarily like (<75% is ideal), but it's also longer-dated, so I've got extra time to reduce cost basis if I need to. I'd look to take profit at 20% of what I put it on for (1.09) rather than going for max, which assumes a finish above the short call strike.
A possible variation is to buy the Dec 44 and sell the Aug 50: 5.04 db/contract, max profit on setup .96/contract, break even at 49.04, debit paid/spread width ratio 84%. The variation lowers your break even by a half strike, thus giving you a smidge more of downside pro, but also lowers your profit potential, although you can certainly roll out any in the money short call to bring in additional credit should you want to go for greater than what the max was on setup.
Other candidates for this sort of setup include: XRT (within 5% of its 52 week high; downside put diagonal), EEM (upside call diagonal; at long-term support), FXI (upside call diagonal; at long-term support). The basic setup for these is to sell the front month 30-delta strike and then buy a back month long such that your break even is slightly below where it's trading (in the case of upside call diagonals; you want the break even above spot with downside put diagonals) without paying more than 75% of the width of your spread.
The one exchange traded fund that still has some juice in it is EWZ, with a background implied of around 34%. Although it's a little early to cycle into August (61 days until expiry), the Aug 17th 29/37 short strangle is paying .90/contract. Given the way it's imploded, however (it's near its 52-week low), I could also see taking a bullish directional shot here, too: the Aug/Dec 28/35 upside call diagonal costs 4.88 to put on, has a max profit of 2.12 on setup, a break even of 32.88 vs. 33.04 versus spot, and a debit paid/spread width ratio of 69.7%.
XLU long pre earnings runWaiting for bearish correction amongst the entire market, if this occurs undervalued XLU, take advantage of earnings run up in utilities around mid/late July.
Approaching support XLU is approaching a weekly support zone following the breakdown of the weekly wedge
Breaking down its Flag- in weekly chart, it broke down from 5-wave Rising Wedge
- after consolidation in a small flag from Feb 2018 till now, it chose to break down again
- it is on the way of BIG C targeting $46 or even lower $42
- set stop at 49.83
XLU buy 49$ Strike Call.Hey guys, this is Spencer and today I'm sharing a trade that I'm currently in and discuss why you can enter it as well! XLU is the SPDR utility ETF and is riding above its 50 day moving average. It is making a series of higher highs on the daily and I believe it will retest the 200 day moving average which is very close. I bought the September 49$ Strike for 3.10 and am looking to make 25% as minimum. Ultimately, with a longer timeview, this option could be worth even more. Take a look at my video and leave a comment.
-I'm bullish XLU.
Short utilities for a 20% drop2-year rising wedge broke down and retested.
The retest itself formed another rising wedge.
Stop over this retest high at 51.50. Pattern target is 40.50
10x potential return
Add to position on break of minor wedge
OPENING: XLU SEPT 21ST 46 LONG/JUNE 15TH 52 SHORT CALL DIAGONAL... for a 4.63/contract debit.
Metrics:
Max Profit on Setup: $137/contract
Max Loss on Setup: $463/contract
Break Even: 50.63
Debit Paid/Spread Width: 77.2%
Notes: Will look to take profit at 20% max; roll short call at 50% decrease in value.
Weekly outlook on XLU The Utilities are in a 9 year uptrend and are either in a bear flag or fixing to break out to the upside and continue the trend.
OPENING: XLU JULY 20TH 47 LONG/MAY 18TH 51 SHORT CALL... for a 3.02/contract debit.
This is a "properly" set up split month Poor Man's Covered Call where the credit received for the short exceeds the extrinsic in the long and has a neutral to bullish assumption. It's neutral because price can stay right here, and I can reduce cost basis further by rolling the short call out in time and/or it's bullish, because it will also benefit from movement of the underlying toward the short call strike.
Metrics:
Max Profit on Setup*: .82/contract
Max Loss on Setup: 3.02/contract
Break Even on Setup: 50.02
Price/Spread Width Ratio: 75.5%**
Profit Target: 20% of debit paid or .60/contract
* -- These metrics are only good at setup. When you roll the short call, the potential max profit and max loss metrics change because you've received additional credit and therefore reduce cost basis further.
** -- I generally like to see less than 75%, but this is in that neighborhood.
Notes: Previously, most of my posts have involved directionally neutral setups like short strangles/straddles and iron condors/flies. These setups don't represent a change in tack over my traditionally agnostic approach to the market, but rather another tool in the tool box for those who want to take a longer-term, directional position in underlyings without ponying up for a full on covered call and/or want to reduce cost basis "up front" before exercising the long for shares.
XLU long ideaUtilities (XLU) might be a good long idea here. As the markets get choppy, utilities like XLU might hold up well. Price above the 10sma and volume increasing.
OPENING: XLU JUNE 47 LONG/APRIL 27TH 49.5 SHORT CALL DIAGONAL... for a 2.05/contract debit (82% of the width of the spread).
Another defined risk, neutral to bullish assumption setup in the April cycle ... .
The natural alternative would be to just sell short puts here (the April 20th 48's are paying .66; 32 delta), but the premium in those just didn't seem that worth it relative to buying power effect.
For example, the general margin requirement for 48 short puts would be about 9.60 with the short puts returning about 6.9% on capital at max profit. In comparison, I'm looking for a quick and dirty ~10% ROC with this setup with the side benefits being that I'm not tying up a great deal of buying power, and I've got quite a bit of time to reduce cost basis in the long should it not go my way in short order ... .
XLU bottomXLU oscillators are showing short term bottom and next week we'll see higher price.
Most of XLU components are energy companies therefore LOW Oil price is GOOD.
72% Probability trade on XLU (Big Lizard)The Utilities sector have been underperforming. With IV Rank of 67.5 and down around 10% since December we are getting at least some premium to sell. I don't want to risk a move upward, so I Sold a Big Lizard (Straddle at 51 and bought the 52 call) to eliminate the risk to the upside. This is a high probability trade above 70% and we make money as long as it stays above $49.82.
The Trade:
38 days to expiration on Feb 16
Sell 51 Put
Sell 51 Call
Buy 52 Call
Credit $1.18
Probability of profit 72%
XLU Bullish Crab & Rhino Bullish crab within a rhino pattern
Crab Measurements
- 1.618XA
- 3.618BC
Rhino Measurements
- 1.27XC
- XA=BC (.707/1.414)
- 2.0AB=CD
- 1.414BC
Utilities Staging a Come-back
Utilities have taken a major hit in the risk-on market environment we've seen lately. Last week $XLU completed a perfect 61.8% retracement of recent gains and showed a strong bounce at that key support level. I think we have an excellent buy for a swing trade at this level with a view to hold patiently for 1-3 months and take profit at all time highs.
XLU - Bear FlagDual stochastic bear flag.
Look for a touch of the 20 or 50 ema near the fib line then a move down.
The Utes looking like they might be ready to go!After the long down move the utilities sector has gone through, it looks like it could be ready to turn around. We might be a little early here but this is what we're seeing that is telling us that it's ready to make a move higher finally:
-When you look at the 4 hour chart you can see that the price is coming out of a squeeze higher to the upside
-When looking at the RSI which is an indicator that we like to use, you can see that there is a major bullish divergence
-There has been an increase in volume the last couple of days, which bodes well for a reversal
Again, we might be a little early here but if you're able to be patient with a trade in utilities we see this thing turning around and moving higher in the near future! We will see what happens in the next couple of days!
