The oil patch: The carnage we've witnessed across a wide range of energy-sector stocks suggests that investors are taking a "sell now and ask questions later" mentality -- even toward companies only tangentially related to oil production. I won't pretend to have any insight into where oil and prices will be a year from now (or five), but we can be certain that fossil fuels will continue to power a large portion of the global economic engine. There are a number of high-quality businesses with strong balance sheets that should be able to ride out the current storm and end up in a stronger position if and when oil prices recover.
Yesterday, after teaching, I decided to do a Bull Call Spread together with a friend. I'll write up the details and see how this plays out.
SPY Bull Call Spread
Outlook, moderately bullish.
Buy Jan 2016 208 Call @ 8.96
Sell Jan 2016 212 Call @ 6.68
Total Net Debit of $228.
Potential ROI of 75.44%
Max risk = Debit
Risking < 2% of Capital
IF SPY reaches 212, will close position to take profit. If SPY plunge, my max risk is only $228.
Above figures is for 1 option spread. Scale up accordingly to your capital.