Benzinga | Dec 14, 2020 08:03AM EST

Carter Worth And Mike Khouw's BlackRock Trade

On CNBC's "Options Action," Carter Worth of Cornerstone Macro spoke about BlackRock, Inc. (NYSE:BLK). He said the asset management stocks have significantly underperformed the S&P 500 since 2018, as they had no gains in the last three years, while the market gained almost 40%.

BlackRock is one of the asset management stocks, but it managed to outperform the market and it is now trading significantly above its 150-day moving average, said Worth. He expects the stock to move lower and he would take profits in the name or take a short position.

Mike Khouw is not inclined to short the stock, but he wants to sell a call spread in BlackRock. He wants to sell the January $710/$740 call spread for $9.50. The breakeven for the trade is at $719.50 or 3.50% above the closing price on Friday. The maximum loss for the trade would be $20.50.