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The recent rally in /CL would suggest that the outlook on the economy is, if not bullish, then not outright bearish. Corporate earnings are strong, a bounce in rates hasn’t spooked the market, and the fun surrounding GME could get more people involved in self-directed trading. What’s not to love? OIH, the oil service stock ETF, has been lagging /CL, though, as the market sees risk in the new administration reining in energy exploration. Its biggest components like SLB and HAL have been dropping over the past couple of weeks, and that’s been weighing on OIH. But OIH’s OTM calls are trading just above equidistant OTM puts, suggesting that the market sees a bit of upside risk. After all, if economic growth drives demand for crude oil, OIH could follow along. With a 14% IV rank, that points to debit spreads for speculative strategies. If you are bullish on OIH and think that it might rally in the next few weeks, the long call vertical that’s long the 160 call and short the 165 call in the March expiration with 45 DTE is a bullish strategy that has a 64% prob of making 50% of its max potential profit before expiry and that generates $.21 of positive daily theta.
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