OptionsPlay DailyPlay

Bearish – XRT – $57.57

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Market Outlook:
Investor sentiment continues to sour as economic indicators decelerates and rising COVID cases offset vaccine optimism. The S&P 500 closed just above its major support level of $353, a break below would bring $325 targets back into play as retail sales provide one of the last bright spots in the US economic recovery but has decelerated. VIX has found support in the 22% range and we may see implied volatility pick up next week.  

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XRT Trade Idea:
On CNBC’s OptionsAction show on Friday, Michael Khouw and Carter reviewed a potential breakdown of retailers. With XRT outperforming XLY by a huge margin, there are classic signs of exhaustion. XRT has printed higher highs for 3 months with momentum not confirming each high while market breadth continues to decline. Expecting XRT pullback towards the performance of XLY, Mike suggested buying a Jan $55/50 Put Vertical. We are making a minor adjustment and suggesting the Jan $56/51 Put Vertical @ $1.12 Debit

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience.