Carter Worth And Mike Khouw See Bullish Signs In Emerging Markets ETF

On CNBC's "Options Action," Carter Worth said a weak U.S. dollar helps the emerging markets because it deflates their debt and increases commodity prices. Many of emerging market countries are dependent on foreign investments, and a weak dollar helps with that as well. Worth also noticed some bullish technical signs on the iShares MSCI Emerging Markets ETF (NYSE:EEM) chart. The stock broke above its resistance and out of a wedge pattern. Worth believes EEM is going to continue to move higher.

Mike Khouw agrees with Worth's bullish view and he wants to buy the January $49/$51 call spread for 60 cents. The trade breaks even at $49.60 or 2.6% above the current stock price. The maximal profit for the trade is $1.40. Khouw explained he picked the $51 strike for the short call because he sees a significant resistance at that price level.

Tony Zhang said he likes the trade, but he sees the stock substantially higher, and instead of the January $49/$51 call spread, he would just buy the January $49 call or he would buy the February $49/$53 call spread.