Carter Worth And Mike Khouw's United States Oil Fund ETF Trade

Carter Worth shared with the audience of CNBC's Options Action his technical analysis of crude oil. The commodity dropped around 16 percent in October and Worth spotted a bearish pattern on its chart. He explained that he usually recommends a short position when he sees a drop below a trend line, but on this occasion he thinks it would be a good idea to initiate a long position in crude oil.

Worth noticed that crude crude oil traded lower six trading days in a row and after doing the analysis of a possible return, he concluded that it has usually traded higher after such a losing streak. He wants to take a long position in crude oil and bet that it is going to bounce after a sharp move lower in October.

Mike Khouw wants to use options in United States Oil Fund LP (ETF) USO to get a long exposure in crude oil. He would buy the December 10/11 call spread in United States Oil Fund LP (ETF) for a total cost of $0.30. The trade breaks even at $10.30 and it can maximally make a profit of $0.70.