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Buy Call XLE

August 9, 2023
Adjust Existing Position: Against XLE January 85 Calls, Sell the January 105 Calls.

Oil and oil stocks are breaking out to a new recent high again this morning. That is a great situation for our XLE January 85 calls. Let’s take advantage of this stock strength and sell a call that is $17 out of the money, and which is at a level not seen in the XLE in years, to lower our cost basis.

To execute this trade you need to:
Sell to Open the XLE January 105 Calls

After this adjustment our position will be:
Long XLE January 85 Calls
Short XLE January 105 Calls

This call sale will drop our cost basis on our bull call spread to $4.60 (approximately).

This call sale will be a mistake if the XLE closes well above 105 on January expiration. However, that would be a great scenario as our spread would be worth $20 at those levels.

Finally, despite selling a call today, there is no question that our XLE position is still a bullish play.

July 25, 2023
Sell a Third of Existing Position: Sell a Third of Your XLE January 85 Calls for $6.50 or More.

Starting mid-week last week, and again this morning, the oil sector and the stocks that make up the XLE are being bought aggressively.

While I like the stock strength and the option activity in the group, today we are going to stick to the plan, sell a third of our position for a profit of approximately 20%, and then go for much larger gains in the weeks to come.

To execute this trade you need to:
Sell to Close a Third of Your XLE January 85 Calls

As is always the case when we take partial profits, we hope this initial sale is a mistake and the stock and our calls trade much higher.

July 12, 2023
Buy the Energy Select ETF (XLE) January 85 Calls (exp. 1/19/2024) for $6.20 or less.

Option activity has been running red hot in oil stocks for the last week and a half as the sector has begun to participate in the market’s rally. Here is a small sample of some of those options trades from across the sector:

Buyer of 20,000 Exxon Mobile (XOM) August 110 Calls for $1.20 – Stock at 104
Buyer of 2,000 Exxon Mobil (XOM) September 120 Calls for $0.54 – Stock at 106
Buyer of 4,000 Exxon Mobil (XOM) August 110 Call for $1.45 – Stock at 104.5
Buyer of 3,000 Schlumberger (SLB) November 60 Calls for $3.10 – Stock at 56 (also a buyer of 2,800 August 60 calls and August 62.5 calls)
Buyer of 8,000 BP (BP) July 35.5 Calls for $0.63 – Stock at 35.5
Buyer of 10,000 Transocean (RIG) August 8 Calls for $0.37 – Stock at 7.40
Buyer of 6,000 Transocean (RIG) August 8 Calls for $0.40 – Stock at 7.5

Today let’s get involved with a bullish position in the oil sector via the Energy Select ETF (XLE).

To execute this trade you need to:
Buy to Open the XLE January 85 Call

The most you can lose on this trade is the premium paid, or $620 per call purchased.

The risks I see in this trade are largely market and sector related. And in the case of the sector, this group can get red hot, and ice cold, in the blink of an eye.

That being said, I really like the option action in the sector as well as the recent strength, and to pay $6.20 for an at-the-money call with six months until expiration is a great risk/reward opportunity.

Position (Original)
XLE January 85 Call
Position Strategy
Buy Call
Opened Date
July 12, 2023
January 19, 2024
Net Price
Jacob Mintz is a professional options trader and editor of Cabot Options Trader. Using his proprietary options scans, Jacob creates and manages positions in equities based on unusual option activity and risk/reward.