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Carter Worth And Mike Khouw's D. R. Horton Trade

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On CNBC's "Options Action," Carter Worth spoke about D. R. Horton Inc (NYSE: DHI). He showed its chart, along with the chart of iShares Dow Jones US Home Const. (ETF) (NYSE: ITB) and concluded there might be a pull back ahead.

Worth explained that iShares Dow Jones US Home Const. (ETF), broke out to the upside recently, but relative to the S&P 500, it stayed at the same level. D. R. Horton and iShares Dow Jones US Home Const.(ETF) are trading well above their 150-day moving average and they are due to a pull back to the trend, said Worth. He would take profits in D. R. Horton.

Mike Khouw suggested that options traders should sell the January 48/50 call spread in D. R. Horton for a credit of $0.80. If the stock stays below $48, he is going to collect the whole premium. He is going to lose money, if the stock closes above $48.80 at the January expiration and he can lose a maximum of $1.20.

Posted-In: Carter Worth CNBC Mike KhouwMedia

 

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