This morning, my Head Technical Analyst Steve Strazza joined me on The Flow Show to put our heads together on a new trade:
Strazza loves the Energy sector here, and of all the charts he likes, I liked this one in Valero Energy $VLO the best:
Best of all, options premiums are near the lowest levels of the year for $VLO:
This isn’t entirely surprising. The stock has been consolidating just below all-time highs since early 2022. And the consolidation has been continually tightening.
Sideways markets may not stop you out of your positions, but they are likely to wear you out. And when traders are exiting their positions giving up on the thought of any directional movement, options premiums tend to decline because few participants feel the need to protect their positions or aggressively bet on accelerating price change.
This creates an opportunity for those of us who can position ahead of the big perspective change that comes with new all-time highs.
Here’s the Play: [Read more…]