Carter Worth And Mike Khouw's Nike Inc Trade

Carter Worth spoke on CNBC's Options Action about a relationship between Nike Inc NKE and Foot Locker, Inc. FL. He explained that Nike products account to 60 percent of Foot Locker's sales and 20 percent of Nike's revenues comes from Foot Locker, Inc. stores. He sees this relationship as a reason for a strong correlation between two stocks and he believes that Nike Inc is going to trade lower, to $52, after Foot Locker, Inc. failed to meet earnings expectations. Mike Khouw agrees that Nike Inc could make a pull back and he suggested an options strategy to make a bearish bet. He would sell the July 57.5/60 call spread for $0.95 and that is the maximal profit he can make with the trade. If the stock trades above $58.45, the trade is going to start to lose money and his maximal loss of $1.55 is going to occur if Nike Inc jumps above $60 at the July expiration.