Carter Worth And Mike Khouw's XLE Trade

Carter Worth shared with the viewers of CNBC's "Options Action" his technical analysis of Energy Select Sector SPDR (ETF) (NYSE: XLE).

He thinks the recent rebound is just temporary and the energy sector is going to trade lower. He is concerned because the energy stocks performed relatively poor in comparison to the S&P 500. The sector bounced off the lows, but it reached new lows compared to the S&P 500. Worth believes the downtrend in the energy space is going to continue and he wants to initiate a short position.

Mike Khouw suggested a bearish options strategy in Energy Select Sector SPDR (ETF). He wants to buy the September 67.5/60 put spread for $2.3. The trade breaks even at $65.2 or 3.76 percent below the current market price. It can maximally make a profit of $5.2, if the stock drops 11.44 percent or lower.