Trade of the Day: Utilities Select Sector SPDR ETF (XLU)

Rising rates are bad for dividend-payers

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Today, we’re opening a new bearish trade on Utilities Select Sector SPDR ETF (NYSEARCA:XLU).

Although investors weren’t showing a great deal of stress around rising rates last Friday, that is a trend we don’t expect to continue. Rising rates are bad for dividend-payers, and XLU is likely to be in the crosshairs if inflation/interest rate expectations shift (as we expect) this week.

If the market falls in the short term, we don’t see XLU being able to defend against that trend either. The potential for some short-term profits in the face of a rising or falling market makes this an attractive entry.

‘Buy to open’ the XLU April 49 Put (XLU180420P00049000) for a maximum price of $1.10.

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