Carter Worth And Mike Khouw's Microsoft Corporation Trade

On CNBC's Options Action, Carter Worth spoke about the recent performance of Microsoft Corporation MSFT. He said that the stock has outperformed the S&P 500, despite the recent pull back. Worth added that the stock has returned to the price level from which it rebounded in late October and now that price level acts as a support. He thinks that Microsoft Corporation is going to bounce off the support and he sees it trading up to $60. Mike Khouw believes that the stock is fairly valued at its current price level and he sees the stock between $52.5 and $57.5 after the earnings. To make a bullish bet, Khouw wants to buy the April 52.5 call for $2.35 and sell the April 57.5 call for $0.70. The call spread would cost him $1.65 and the break even for the trade is at $54.15 or approximately 3.6 percent higher from the current stock price. If Microsoft Corporation trades to or above $57.5, Khouw can make $3.35, which is his maximal profit.