Oil rally and oil stocks look to have stalled out. The last rally up ti the $42 level on crude signified the biggest short covering rally on record. With the shorts now done covering, weak fundamentals and a stronger dollar should put alid on a further leg higher.
ExxonMobil (XOM) is the biggest of the big oil producers, and the stock looks toppy around the $84.50 level.
Let’s give ourselves an even bigger cushion and position for a stall out in the oil rally just above the recent highs at $87.
Sell the XOM May $87.50 calls
Buy the XOM May $90 calls
0.55 net credit
Net margin requirement $195 per spread.