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Carter Worth And Mike Khouw's PowerShares QQQ Trust, Series 1 (ETF) Trade

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Carter Worth And Mike Khouw's PowerShares QQQ Trust, Series 1 ETF Trade

Carter Worth spoke on CNBC's Options Action about the tech sector, and he suggested that it is reasonable to expect a pull back in the space.

Worth analyzed a group chart of five major stocks in the sector, and he noticed that the chart shows a near perfect up trend. He has also noticed pull backs to the trend line, and since the group is currently trading above the trend line, he expects another pull back.

He added that PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ) made new highs in absolute measures, but it hasn't made new highs relative to the whole market and he sees that as a bearish sign.

Mike Khouw said that it is very hard to call tops, and he thinks that the best way to trade the tech sector is by selling the December 118/122 call spread for a credit of $1.85. If the stock stays below $118, Khouw is going to make a maximal profit of $1.85. Above $119.85, the trade starts to lose money and it can maximally lose $2.15.

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