'Set It And Forget It' Trade In XLB

Jul 18, 2018

XLB (Materials ETF) has been consolidating for weeks and looks like it's getting ready to make a move higher. With Squeezes on both the Weekly and Daily Chart this looks like a 'set it and forget it' type trade:



In a perfect world, I'll be looking for a pullback tomorrow where I can pick up the 58/57 Put Credit Spread:

Put Credit Spread
Sell 58 Jan Monthly Put
Buy 57 Jan Monthly Put

At the current price, you can nearly get a 1x1 spread is what I like doing. In this case (once again at the current closing price) risking $51 to make 49/contract. This is a trade I want to be able to put on and not have to worry about too much. Ideally, the trade will be near max profit far before the contracts expire. If you'd prefer to play an underlying, you can also trade NYSE:DWDP which makes up 22% of the ETF. It too has a Weekly Squeeze setting up and its chart looks nearly identical to XLB:



Playing the ETF is just an easy way to play to movement of the entire sector which as a whole looks bullish. With the ETF you're less susceptible to things like news based moves that can affect an individual stock without affecting the entire sector.