Market Overview

Carter Worth And Mike Khouw's GDX Options Trade

Share:
Carter Worth And Mike Khouw's GDX Options Trade

Carter Worth of Cornerstone Macro spoke on CNBC's "Options Action" about assets that could provide safety in the current environment. Investors who want safety should look at gold and gold miners, instead of bonds and treasuries, thinks Worth.

He would be a buyer of VanEck Vectors Gold Miners Etf (NYSE: GDX) because he thinks the pullback is over and the next direction for the stock should be up. Worth sees the recent price action as consolidation after a big move higher. GDX bottomed in March at $16, peaked in August at $46 and then it pulled back to its current price of $36. The pullback is a third of the move higher and Worth explained that stocks often find support after such a pullback.

Mike Khouw wants to sell options to finance a bullish bet because of the high near-term implied volatility. He wants to sell the November 20, $36 put for $1.15 and the November 20, $40 call for $0.65. He would also buy the January $15, $38 call for $2.60. The total cost for the trade would be $0.80 and if the stock stays between $36 and $40 at the November expiration, the puts Khouw sold are going to expire worthless and his long call would have a breakeven at $38.80.

 

Related Articles (GDX)

View Comments and Join the Discussion!

Posted-In: Carter Worth CNBCLong Ideas Options Markets Media Trading Ideas ETFs