Shares of the energy select sector DWCPS (ETF) (NYSEARCA:xle), of course, recently a bright spot in a grey market. Xle With real-time increased by almost 5% this month, compared with only 1% gain for the s&P 500. The rally in large reserves of oil for a long time, especially given the sharp gap up oil reserves to the market as a whole.
Now that oil reserves have caught up, I expect the rally to a more powerful to cool in the coming weeks.
Powerful, consists of the biggest names in the oil sector, with industry giants, companies Exxon (Ticker NYSE:xom AT) and the Chevron Corporation (Ticker NYSE:cvx at) is 40% overall in real-time. There is a very high correlation between oil and the price of oil, which makes sense. The oil for five days in a row and is now trading at the highest level since December 2014. Look for rally in oil prices and oil reserves, to begin to weaken in the coming months.
After really oversold MACD reading at the beginning of February, more powerful, now very much rallied and is now at its highest level, MACD in the past two years. Previous times that the MACD has approached the same levels marked short-term tops in xle in real-time. Also large load resistance approaching 72 $space.
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I was strongly bullish in my previous article about the oil reserves of 21 March and suggested to cause the spread of the diagonal to get the profit from the pop large reserves of oil. Now, xle real time rose by more than 5%, my bullish view tempered in a more neutral position-because price matters.
Implied volatility (IV) options are more powerful, at the 54th percentile, meaning option prices are slightly more expensive. This helps spread strategies when building transactions. Therefore, to set up a stall in the rally of crude oil, the call credit spread makes intuitive sense.
Xle trade in real time idea
To buy xle in may of 77 $calls and sell the xle in may of $75 calls at 25 cents less credit.
The maximum profit from the trade is $425 for the distribution with the maximum at risk of $175 per spread. Return on risk 14.28%. Short the $75 strike is structured above 72 $resistance level and provides a 6.18% pillow down to 70.63 $the closing price of Thursday xle In real-time.
The Tim may contain some of the aforementioned securities in one or more of his letters. Anyone interested in learning more about Tim and his version of the strategy can go https://marketfy.com/item/options-and-volatility/.