timwest
Short

PAIRS TRADE: Short XLE, Go Long Crude Oil

AMEX:XLE   SPDR SELECT SECTOR FUND - ENERGY SELECT SECTOR
281 2 1
Widest spread in 5 years in XLE             versus Crude Oil             (Cl1!-front month)-

Use this wide spread to leg into positions and set your sights on a big reversion in this wide spread.

Tim

9/2/2014 2:40PM EST
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What is your projected price for XLE ? Does this graph suggest that XLE and crude oil each should change their direction 25% toward each other? If this is right so I see XLE be around 73 and crude oil 116.5. Please let me know what do you think. Thanks
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timwest PRO ZaloRostam
I project the price of XLE will move down MORE than Crude, to the tune of 25%. I think at least a 10% trade with a 5% risk parameter would make sense.

So, for a $100,000 account. Short $10,000 XLE, and go long $10,000 USO. This would risk $500 to make $1000.
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