For the first time in recent recollection, we have seen some bullish looking options activity in the popular XOP (SPDR S&P Oil & Gas Exploration & Production, Expense Ratio 0.35%, $2 billion in AUM).
The October 35 strike calls have traded in decent size today and although these options are more than 12% out-of-the-money at present levels, we are still paying attention. XOP in fact was trading above $35 in mid-May before a swoon in Crude Oil prices and related Energy equities caused it to tumble down to current levels. In this morning’s AM session the sector fund has seen a bit of a relief rally (over 1%) and the fund which was in danger of a new 52 week low ($29.8950) is now trading above $31.
In spite of negative performance in 2017 XOP has still managed to attract more than $225 million in new assets year-to-date via creation flows and as we have profiled in the past, the fund follows a modified equal-weighting methodology unlike many other Energy Equity ETFs which tend to be market-capitalization weighted and dominated in a sense by a handful of names at times.
XOP as we have mentioned in the past when covering this fund, also has rather balanced exposures across the Large (28%), Mid (31%), and Small-Cap (35%) segments and the top individual weightings are as follows: 1) RICE (2.80%), 2) HFC (2.46%), 3) EQT (2.27%), 4) PSX (2.22%), 5) COG (2.22%), 6) ANDV (2.20%), 7) VLO (2.17%), 8) CVX (2.13%), 9) PBF (2.13%), and 10) MPC (2.11%).
When options are trading in XOP and volatility in the space remains high we also typically watch relatively newer (debuted in late May of 2015) but influential leveraged “Bull” and “Bear” funds that track the same underlying index as XOP, the S&P Oil & Gas Exploration & Production Select Industry Index.
These funds are the $151 million GUSH (Direxion Daily S&P Oil & Gas Exploration & Production Bull 3X, Expense Ratio 1.07%) and the smaller $22.5 million DRIP (Direxion Daily S&P Oil & Gas Exploration & Production Bull 3X, Expense Ratio 1.10%), and have proven popular among traders attempting to capitalize on short-term swings of volatility in the segment, which have been frequent in 2017 especially since mid to late May.
The SPDR S&P Oil & Gas Explore & Prod. ETF (NYSE:XOP) was trading at $31.09 per share on Tuesday afternoon, up $0.33 (+1.07%). Year-to-date, XOP has declined -24.61%, versus a 12.32% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.