On Friday’s Options Action, the crew analyzed the performance of oil prices. While other commodities struggled in a strong dollar environment this past year, crude prices have remained resilient until the past few weeks. Crude broke below a major bullish trendline and completed a topping formation around the $75 level a couple of weeks ago. Coupled with a strengthening dollar, the large drillers have an asymmetrical risk to the downside with a slide in oil prices. Expecting a move lower in energy stocks Michael Khouw suggests buying an Oct 71/67 Put Vertical for a $0.95 Debit. As of Friday’s close, this spread is trading at $0.87.
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