XLE Energy Sector approaching ATH. Options play with Cushion

With energy prices continuing their rise due to global shortages and war, XLE has climbed over 50% YTD. The potential upside to all-time highs, along with the intact trend since March of 2020 are enticing. It might be harder to take on a position after a 100% YoY increase and not feel like its FOMO. So, I look for options to enter with a bullish outlook but protect from downside volatility. Using a custom options strategy we can build in a 23% cushion ($65.38) and still capture all the upside to the ceiling ($89.13).

Using this strategy, it’s possible to make up to 9% (15% annualized).

Start to lose only if XLE falls by more than 22% to below $63.58 as of 03/31/2023.

Option Order
Buy 1 $82 call
Sell 1 $87 call
Sell 1 $64 put
Exp 3/31/23

Required to invest: $6,362.98