Energy Sector SPDR (XLE) – Options Action Trade for August 20th, 2018

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.

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: XLE Options Action

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