Carter Worth And Mike Khouw's Coca-Cola Trade
Worth compared the performance of the stock with the S&P 500 index, and he concluded that it underperformed significantly, returning only half of what the S&P returned.
Coke has also underperformed the consumer staples and soft drinks sectors.
Worth presented a chart that showed how Coke shares tested their highs from 1995 twice, and failed to break above that level. Taking the negative signs into consideration, Worth would be a seller of the stock.
Mike Khouw suggested a purchase of a put spread as a way to make a bearish bet. He would buy the April 40 put for $0.70 and sell the April 38 put for $0.30, paying $0.40 for the spread.
He can make $1.60 on this trade.
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