Carter Worth And Mike Khouw's Bearish Home Depot Trade

Carter Worth spoke on CNBC's "Options Action" about Home Depot, Inc. HD.

He analyzed the stock from the technical standpoint and he concluded that it broke its trendline and it performed poorly relative to the S&P 500. It failed to make new relative highs when the stock was making new highs. Worth sees that as a warning sign and he would be careful going into earnings on Tuesday.

Mike Khouw doesn't expect stellar retail sales because of poor weather. He likes the stock generally, but he sees potential downside risk. He wants to buy the June 190/180 put spread for $2.50. The trade breaks even at $197.50 and it can maximally make $7.50 if the stock drops to $190 or lower.

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