One of the major energy ETF’s with names like Chevron, Exxon Mobil, and Halliburton as their top holdings; could be poised for a much larger move as this new bull cycle takes us into the elections. Energy stocks and commodity names are at the forefront of this recent move to all time highs on the S&P and the options orderflow we’ve been watching is indicating even higher prices for XLE.
July 14th, we saw a buyer come in and open a position on some in-the-money $68.5 Calls for August expiration. Prior to this we also saw a much more aggressive buyer speculate out to January ’17 on a much further run-up.
The buyer for the $75 Calls paid about $1.79 for these options which are currently trading around the same price. At-the-money options for $XLE on that same expiration are trading around $4 which would mean if $XLE gets to $75 fairly quick you can expect to sell this option around slightly under $4. The closer you get to expiration though, the more you’ll need to see the stock run through your strike price to maintain that premium.
Share this Post