On CNBC's Options Action, Carter Worth analyzed the banking sector from a technical standpoint. He showed on a daily chart of KBW Nasdaq Bank Index that it's trading sideways after a huge run higher and he explained that stocks usually pull back to its trendline after such pattern forms on a chart.
Mike Khouw thinks that we could see a pull back or a continuation of sideways trading in the sector and he suggested a bearish options strategy in Citigroup Inc C as the best way to make money in that scenario. He wants to sell the March 60/62.50 call spread for $1. If Citigroup trades below $60 at the March expiration, Khouw is going to make the maximal profit of $1. Above $61, he's going to lose money and he can maximally lose $1.50.
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