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Carter Worth And Mike Khouw's United States Oil Fund ETF Trade

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Carter Worth shared with the audience of CNBC's Options Action his technical analysis of crude oil. The commodity dropped around 16 percent in October and Worth spotted a bearish pattern on its chart. He explained that he usually recommends a short position when he sees a drop below a trend line, but on this occasion he thinks it would be a good idea to initiate a long position in crude oil.

Worth noticed that crude crude oil traded lower six trading days in a row and after doing the analysis of a possible return, he concluded that it has usually traded higher after such a losing streak. He wants to take a long position in crude oil and bet that it is going to bounce after a sharp move lower in October.

Mike Khouw wants to use options in United States Oil Fund LP (ETF) (NYSE: USO) to get a long exposure in crude oil. He would buy the December 10/11 call spread in United States Oil Fund LP (ETF) for a total cost of $0.30. The trade breaks even at $10.30 and it can maximally make a profit of $0.70.

 

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Posted-In: Carter Worth CNBC Mike Khouw Options ActionOptions Markets Media ETFs