Mike Khouw And Carter Worth Team Up To Set Up GoPro Trade

Speaking on CNBC's Options Action, Carter Worth analyzed GoPro Inc's GPRO chart and showed a bearish pattern that could lead to a significant decline for the stock. Worth said that a trend line in GoPro Inc is broken and the head and shoulders pattern has appeared. The stock traded in a range before it doubled in price in the last days of September and now it could return to $50. Mike Khouw thinks that the best way to set up a bearish bet using options is by selling two January 50 put options for a total of $6.50 and buy the January 60 put option for $7. The set up would cost $0.50 and the maximal profit would be $9.50. If the stock trades below $50, the profits will be erased at $40.50 and he would have to purchase the stock and pay $50 for it. With the booked profits from the trade, the stock would cost him $40.50. Both Worth and Khouw believe that a long position in GoPro at this price would be a sensible trade.