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Oil futures are surging after Israel strategically launched waves of airstrikes against Iran. I want to use options on the Energy Select Sector SPDR Fund (XLE) to produce income as well as properly capture this pop in both crude and brent which I believe will be a short-lived move. Some of Iran’s top military leaders were eliminated, and one of the country’s main underground uranium enrichment sites has been reportedly destroyed. Israeli jets entered via Syria after disabling Iranian and Iraqi air defenses, striking enrichment specific sites and missile bases. The reason I believe this move in oil will fade is due to the post Friday morning where President Donald Trump vows to defend Israel. Furthermore, the recent cooler-than-expected inflationary data is somewhat predicated on lower crude oil prices, which translate to lower cost of gasoline for Americans. @CL.1 YTD mountain WTI Crude, YTD The top three holdings in XLE, which make up nearly 50% of the ETF from a market cap weighted perspective, are Exxon (XOM) , Chevron (CVX) , and ConocoPhillips (COP) . I personally like all three of these oil stocks and I own Exxon (XOM) in my Essential 40 ETF (ESN) . However, due to this acute reaction in the price of crude oil, I do not think WTI crude oil stays above $75 for too long. So my options bet will pay off if the XLE ETF rolls over with the price of crude. The Trade (Selling a call spread) Selling $90 XLE 7/18/25 call for $1.65 Buying the $95 XLE 7/18/25 call for 55 cents This trade allows an investor to collect $110 for each one lot spread that is sold This trade was executed when XLE was roughly trading $88. This spread has a defined maximum risk of losing $3.90 or $390 per one lot spread if oil continues to surge. But I am anticipating that the pop in Crude Oil (WTI) will subside in the next month. DISCLOSURES: (Sold this spread) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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