Energy Spread

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I’ve got five different vertical spreads going, but they’re all leaning toward the bearish side. Just to mix things up, I’d like to offer a long idea for a change: the energy sector, as represented by symbol XOP.

The trade I entered today is a simple one. There are two calls – a long at 20 and a short at 24.

My opinion is that we seem to have very firm support at about 20.

And Slope’s payoff graph illustrates the risk/reward nicely: