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Carter Worth And Mike Khouw's IWM Trade

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On CNBC's "Options Action," Carter Worth shared with the audience his technical view on iShares Russell 2000 Index (NYSE: IWM). He said the ETF is trading at its strong resistance and he sees the situation as a classic example of a rally to a difficult level.

Worth is concerned because he spotted a double top pattern in IWM as it failed to break its 2018 high. The ETF is also heavily weighted to financials, which Worth sees as a problem. Its relative performance to the S&P 500 is also poor and it peaked in 2016.

Mike Khouw wants to make a bearish bet by purchasing the August $130/$110 put spread for a net debit of $4.30. The trade breaks even at $125.70 or 9.5% below the current stock price. It can maximally make a profit of $15.70.

 

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Posted-In: Carter Worth CNBC Mike KhouwBroad U.S. Equity ETFs Options Markets Media ETFs