This Ain't Gonna Make the EV Bros Happy
There are a bunch of oil names breaking out. No surprise considering the performance of USO since we got in on February 3rd.
The one that most has our attention right now is Chevron $CVX. Check out this chart:
The team shared this chart earlier in the week, and today we're seeing price action above $96 per share which was our signal to get in.
Volatility is pretty low in this name, but there's still some juicy premium in OTM calls, so we're going to leverage that to our advantage to lower our cost of participation in a bullish trade.
Here's the Play:
I like a $CVX September 100/115 Bull Call Spread for approximately $4.30 here. This means we'll be long the 100 strike calls and short an equal amount of 115 calls for a net debit. The most we can lose is this debit.
The risk management level we'll be watching is $90. Any close below there is our signal that this trade is a bust and I'll look to exit to limit any further losses.
On the upside, I'll look to close this spread for around $10.00 if we get the opportunity to. This would represent a more than doubling of our money and capturing a little more than 50% of the maximum potential gain in this spread, without having to hold it all the way to September expiration.
If you have any questions on this trade, subscribers can send them here.
P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free!