Benzinga | Nov 21, 2020 12:28PM EST

Carter Worth Says XRT Consumer Discretionary SPDR Ready for 5% Pullback

Carter Worth of Cornerstone Macro shared with the viewers of CNBC's "Options Action" his analysis of SPDR S&P Retail ETF (NYSE:XRT). He said the ETF outperformed Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) in the last month, last quarter and over the last six months, but he believes it has come a little too far, too fast. Worth thinks XRT is ready for a pullback of 5% or more.

Mike Khouw agrees XRT is pretty extended at its current price and he would consider hedging or selling a long position in the name. One way to trade the bearish theme is by purchasing the January $55/$50 put spread for 90 cents. The trade breaks even at $54.10, or around 6% below the closing price on Friday. It can make a maximal profit of $4.10, he said.