What is a recommended trade strategy for energy stocks?

The recommended trade strategy of going long on energy stocks while hedging with oil futures reflects a prudent approach to managing risk and capitalizing on market movements within the energy sector. This strategy acknowledges that energy stocks tend to be influenced by the price of oil. By taking a long position in these stocks, an investor can benefit from potential appreciation if the market perceives an overall bullish trend in energy demand or if specific companies within the sector show strong growth prospects.

Hedging with oil futures offers protection against adverse movements in oil prices that could negatively impact the performance of energy stocks. If oil prices were to decline significantly, the hedging position in futures could help offset the loss on the long stocks. This dual strategy effectively allows the investor to position themselves for potential gains while simultaneously managing downside risk, creating a balanced investment approach that is particularly relevant in the volatile energy market.

The other options represent strategies that either do not align well with the dynamics of energy markets or divert focus away from energy stocks, which is why they are less suitable in this context.