Carter Worth And Mike Khouw's Select Sector Financial Slct Str SPDR Fd Trade

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On CNBC's Options Action
, Carter Worth and Mike Khouw teamed up to create a trading idea that should work well in the rising interest rates environment. Worth presented a couple of charts of
Select Sector Financial Slct Str SPDR FdXLF
and showed a technical pattern called wedge. He explained that after it appears on the chart the price usually moves sharply, but it can move in both directions. He thinks that the ETF is going higher because he believes that interest rates are going higher, which is good for the financial space. Khouw said that options are cheap now and he recommended a purchase of call options as a simple way of making a bullish bet. He would buy the July 25 calls for $0.25, which is approximately 1 percent of the current market price. The break even is at $25.25. Since the wedge pattern indicates a possible sharp move in both direction, Khouw thinks that it is better to define risk with options.
Posted In: CNBCMediaCarter WorthMike KhouwOptions Action
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