Carter Worth And Mike Khouw's XOP Trade

Carter Worth spoke on CNBC's "Options Action" about the energy sector. He said that Energy Select Sector SPDR XLE has rallied almost 100% and it's trading now close to a difficult level, where traders who lost money have a chance to get it back and they're likely to act.

SPDR S&P Oil & Gas Explore & Prod. XOP also rallied. It jumped around 115% from its lows and it's now trading against its down trend line. Worth thinks it's time to take profits in XOP, if you're long, or to sell it short, if you don't have a position in the name.

Mike Khouw suggested a bearish options trade in XOP. He wants to buy the July $60/$55 put spread for a total cost of $1.35. The trade breaks even at $58.65 or around 8% below the current stock price. It can maximally make a profit of $3.65, if the stock drops to $55 or lower at the July expiration.