The financials haven't been a pretty sight. However, when you separate the bigger banks ($XLF) with the regionals ($KRE) a slight divergence appears.
While $XLF still flounders around that $13 level, $KRE has already come back up and retested its late August highs. Yesterday we discussed a potential options expiration trade in $FAZ, so a long in a bank could help to reduce market risk.
$STI is one of the better looking bases in this market, assuming we see a confirmatory break higher.
Option Trading Strategies
$STI does have earnings upcoming and so you will have extra earnings risk as discussed in a part of my Option Trading Basics bootcamp. To reduce the overall volatility risk from earnings, consider a bull call spread, which will have a much lower vega compared to naked longs.
Specifically, I would look at the Jan 20/25 Bull Call Spread, which is currently going for 0.85. Ideally you should wait for a confirmatory break higher above 20.25, but you could cheat a little bit if it breaks the blue descending trend line.
Assuming the 18 level is the most recent support, you could use that as your stop, exposing you to an initial downside risk of 0.15 per spread.
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