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The market is fairly bullish, but that bullishness is actually a good signal for a downside trade on Clorox Co (NYSE:CLX). Consumer products/staples have been struggling with shrinking margins, and falling dividend values (relative to interest rates) and we think CLX is poorly positioned to defend against sellers.
The stock has triggered a long-term head and shoulders pattern that has been threatening a big breakout for a few days. Negative momentum at an otherwise positive time is a good sign that the stock is intrinsically weak and should help hedge against any short-term shocks after the recent run in the S&P.
‘Buy to open’ the CLX November 125 Puts (CLX171117P00125000) for a maximum price of $2.30.
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