Carter Worth And Mike Khouw's Costco Options Trade

On CNBC's "Options Action", Carter Worth shared with the audience his analysis of Costco Wholesale Corporation COST.

He thinks the retail sector is going to continue to trade lower and he noticed that Costco held too well during the decline of the retail sector. The stock has broken its trendline and Worth expects it to drop another 10 percent. He would close a long position going into earnings.

Mike Khouw suggested a bearish options trade in the name. He wants to sell the January 230/240 call spread for $4.10. He is going to start to lose money if the stock trades above $234.10 and he can maximally lose $5.90. If the stock stays below $230, Khouw is going to collect the premium.