Mike Khouw's Utilities SPDR Trade

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On CNBC's Options Action
, Mike Khouw and Carter Worth spoke about a bearish options trading strategy in
Utilities SPDR (ETF)XLU
. Worth used technical analysis to show that
Utilities SPDR (ETF)
is trading on the upper band of its up trend and when that was a case in the past the stock traded lower. He thinks that this pattern is going to continue and he believes that
Utilities SPDR (ETF)
is going to $42 from its current price of $45.47. Khouw suggested a simple options strategy because the options are cheap at the moment. He would buy the January 45 put for $1.20 which is approximately 2.5 percent of the value of the underlying. The break even for this trade is at $43.80. Khouw added that the utility companies are trading at or above their long term average multiples.
Posted In: CNBCMediaTrading IdeasCarter WorthMike KhouwOptions Action
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