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Carter Worth And Mike Khouw Think That Investors Should Protect Their Portfolios

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On CNBC's Options Action, Carter Worth compared the performance of the S&P 500 with the performance of the STOXX EUROPE 600 Index and Nikkei 225 Index. He showed that the S&P 500, which gained 1.2 percent year to date, has significantly outperformed STOXX EUROPE 600 Index and Nikkei 225 Index, which fell 8.9 percent and 12.4 percent respectively.

Worth thinks that the divergence is too big and he expects to see the S&P 500 trading lower. He added that it is unlikely that STOXX EUROPE 600 Index and Nikkei 225 Index are going to trade higher.

Related Link: Stocks Are Overbought At Levels Not Seen Since 2013

Mike Khouw believes that it makes a lot of sense to hedge a long stock portfolio against a potential decline. He would buy the June 205/190 put spread in SPDR S&P 500 ETF Trust (NYSE: SPY) for $3.20. The trade breaks even at $201.80 and it can maximally make $11.80 if the ETF drops to $190.

Posted-In: Carter Worth Mike KhouwAnalyst Color CNBC Options Markets Media Trading Ideas


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