Carter Worth And Mike Khouw's Bearish Trade On XLF

On CNBC's "Options Action," Carter Worth spoke about Financial Select Sector SPDR Fund (NYSE:XLF).

The ETF has broken below its uptrend line recently and it looks to Worth like it is going back to its pre-pandemic highs, before the plunge. He's also concerned about XLF's relative performance versus the S&P 500. It has outperformed the market for only five to six months. The ETF is now underperforming the S&P 500 and Worth is a seller.

Mike Khouw wants to buy a put spread in XLF to make a bearish trade. Specifically, he wants to buy the September $35 put for $1.37 and sell the September $31 put for 37 cents. The trade would cost him a dollar and it breaks even at $34 or around 3.5% below the closing price on Friday. If the stock drops to $31 or lower, the trade is going to reach its maximal profit of $3.