Dan Deming's Energy Select Sector SPDR Trade

Dan Deming of KKM Financial spoke on Bloomberg Markets about a bullish options trade in Energy Select Sector SPDR (NYSE: XLE).

Deming believes the current move higher could continue and he wants to sell the March 55 put and buy the March 60/64 call spread. The trading structure allows him to collect $0.05 and if the stock moves above $60, the trade is going to make an additional profit. Its maximal profit is $4.05 and it can happen if the stock moves to $64 or higher. If Energy Select Sector SPDR drops below $55 at the March expiration, Deming is going to have to buy the stock and pay $55 for it.