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On Friday’s CNBC’s Options Action, the crew analyzed the performance of the retail industry. The retail sector has underperformed the overall market by a wide margin over the past 2 years. Macy’s has been one of the worst performing stocks in this sector and recently broke below a major support level at $20. Coupled with poor fundamentals and a rising leverage ratio, provides a bearish scenario going into earnings. Expecting a move lower, Michael Khouw suggested buying a Nov 10 18.5/16.5 Put Vertical for a $0.60 Debit.

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