Analyst Recommends XLF August 56 Calls at $1 as Financials Gain Relative Strength
Updated
Updated · CNBC · Jul 10
Analyst Recommends XLF August 56 Calls at $1 as Financials Gain Relative Strength
1 articles · Updated · CNBC · Jul 10
Summary
$1 August 56 calls on XLF are the recommended trade, with the ETF near $55.50 and earnings season starting next week with big banks.
Four weeks of improving relative rotation in financials versus the broader market underpin the bullish view, while technology leadership has flattened and weakened over the past three weeks.
Financials also look inexpensive at about 15.5 times forward earnings—roughly 1.25 turns below 2024 levels—even after adjusted EPS tripled over the past decade.
Historically low implied correlation makes basket options cheaper relative to single-stock options, supporting outright ETF call buying for roughly six weeks through the heart of bank earnings.