Trade of the Week: Energy

Trade of the Week

A popular method of trading the energy sector is by using the Energy Select Sector SPDR ETF (XLE), which tracks the energy stocks of the S&P 500. A strategist placed a call ratio spread last week that likely signals bullish expectations in energy stocks through April. A ratio spread is a way to reduce the cost of a bullish vertical spread, but it leaves the spread holder exposed to significant risk in the event of a large, unexpected upside move.