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One trader’s plan to quadruple his money by betting against a sliding sector

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There's big money to be made by betting against health-care stocks, according to one chart-minded trader.

The SPDR health-care ETF (XLV) is down nearly 7 percent since hitting its 2016 peak in August. And as of midday Tuesday, the health-care sector was the worst performer on the day, dropping about 2 percent.

"We're looking at a broader rollover in stock market averages today, and specifically we're being led in the sector space by health care," Todd Gordon of TradingAnalysis.com said Tuesday on CNBC's "Trading Nation." "Health care has been an underperforming sector SPDR, and today it seems like they want to punch through."

Below the $72 "support level" he spots, Gordon thinks that the XLV could fall to as low as $67 or $68.


In order to profit off of such a move, Gordon turns to the options market. Specifically, he buys the November 70-strike puts and sells the November 68-strike puts for a total cost of 45 cents per share. If Gordon's trade succeeds, and XLV closes at or below $68 on Nov. 18, then this options spread will be worth $2.00 per share, for a profit of $1.55.

In other words, Gordon would more than quadruple his money on the trade.