DailyPlay – Opening Trade (XLF) – November 7, 2024

XLF Bullish Opening Trade Signal

Investment Rationale

Financial Select Sector SPDR ETF (XLF) – The conclusion of an election cycle often brings clarity to the market and reduces volatility, boosting investor confidence. Our after the election strategy began with the purchase of a bearish long put spread on the VIX index (DailyPlay – Opening Trade (VIX) – October 25, 2024), anticipating that volatility would decrease following the election. The next step is to position in select market sectors during the post-election optimism, which coincides with the holiday season. If interest rates remain favorable, policies support growth, and the economy continues to expand, the financial sector appears promising. Despite a 31% increase in the XLF this year, financial stocks remain undervalued, trading at a 25% discount to the S&P 500. This suggests potential for continued growth, as investor allocations to financials are at their lowest since 2010.

XLF – Daily

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Calls

Details: Buy to Open 8 XLF Jan 17 $48 Calls @ $2.72 Debit per Contract.

Total Risk: This trade has a max risk of $2,176 (8 Contracts x $272) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $272 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue its bullish trajectory.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 90

Stop Loss: @ $1.36 (50% loss of premium paid)

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Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

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