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 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.
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