Carter Worth And Mike Khouw's XLE Trade

Carter Worth shared with the viewers of CNBC's "Options Action" his technical analysis of Energy Select Sector SPDR (ETF) XLE.

He thinks the recent rebound is just temporary and the energy sector is going to trade lower. He is concerned because the energy stocks performed relatively poor in comparison to the S&P 500. The sector bounced off the lows, but it reached new lows compared to the S&P 500. Worth believes the downtrend in the energy space is going to continue and he wants to initiate a short position.

Mike Khouw suggested a bearish options strategy in Energy Select Sector SPDR (ETF). He wants to buy the September 67.5/60 put spread for $2.3. The trade breaks even at $65.2 or 3.76 percent below the current market price. It can maximally make a profit of $5.2, if the stock drops 11.44 percent or lower.