Carter Worth And Mike Khouw's XBI Trade


On CNBC's "Options Action," Carter Worth of Cornerstone Macro said SPDR S&P Biotech ETF XBI has a bounce potential, having sold off to support.

XBI is an equal-weighted ETF and it is currently lagging iShares Biotechnology ETF IBB, which is a market-cap-weighted ETF. But just a few months ago, the high flyer was XBI. Since then, it has crashed back to earth. It is now trading at a strong support level and Worth sees an opportunity to buy.

To make a bullish bet, Mike Khouw wants to buy the October $130/$145 call spread in XBI for $3.95. The trade breaks even at $133.95 or 5.23% above the closing price on Friday. The maximal profit for the trade is $11.05 and it can reach it if the stock jumps at least 8.25%, to $145 or higher.

Market News and Data brought to you by Benzinga APIs
Posted In: BiotechSector ETFsOptionsMarketsMediaETFsGeneralCarter WorthCNBCMike KhouwOptions Action
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!