Trade of the Week: Financial Sector Stocks

03/20/2020 10:02 am EST


Jay Soloff

Options Portfolio Manager, Options Floor Trader PRO

With stocks in a bear market and potentially more selling ahead, the Federal Reserve has cut interest rates to 0% and started a new $700 billion quantitative easing program. This could cause a substantial amount of volatility in the market, but especially in rate sensitive sectors like financials. In fact, a trader just bought a large straddle in the SPDR Sector Select - Financial ETF (XLF).

A straddle is when both the call and put at the same strike in the same expiration are purchased. It is a trade that can make money when there is a lot of volatility in the ETF. This particular trade seems to predict a huge move (up or down) in XLF before September.

Video link:

Jay Soloff is the Options Portfolio Manager at Investors Alley. He is the editor for Options Profit Engine, an investment advisory bringing you professional options trading strategies, with all the bells and whistles of Wall Street, but simplified so all you have to do is enter the trades with your broker.

Related Articles on OPTIONS

Keyword Image
Go Camping with Yeti
07/01/2020 5:00 am EST

As people across the globe continue to socially distance in the wake of COVID-19, a renewed interest...

Keyword Image
Trade of the Week: Costco
06/08/2020 9:52 am EST

After earnings last week, there was quite a bit of options action in Costco (COST)....