Tony Zhang of OptionsPlay spoke on CNBC’s “Options Action” about Northrop Grumman Corporation (NYSE:NOC). He said the stock has broken below some major support levels and there could be further downside.
To make a bearish bet, Zhang wants to sell the October $350 call and buy the October $365 call in Northrop Grumman for a total credit of $6.10. If the stock trades below $350 at the October expiration, Zhang is going to collect $6.10. The trade starts to lose money above $356.10 and it can maximally lose $8.90.
