Mike Khouw And Carter Worth Suggest A Bearish Set Up For iShares Dow Jones Transport. Avg. (ETF)

Speaking on

Carter Worth explained the reasons why the rally in

should not continue. He compared the performance of transport stocks with the performance of the S&P 500 since 1980 and concluded that recently the transport stocks doubled the performance of the S&P 500, although they performed in line historically. Worth believes that traders should take profits because there is a correction ahead. Mike Khouw suggested a bearish options strategy to capture the decline. He wants to buy a put spread in

. Specifically, he wants to buy the January 157.50 put for $4.00 and sell the January 150 put for $1.50. He would pay $2.50 for this trade and his maximal gain is $5.