On CNBC's "Options Action," Carter Worth spoke about Xilinx, Inc. XLNX. He said the semiconductor stocks are up on the week, while most sectors were down.
He analyzed Xilinx from a technical standpoint and he noticed it has significantly underperformed the PHLX Semiconductor Sector in the last five and 10 years. But in the last six months, Xilinx gained 26% while the sector gained only 13%. The good relative performance is a bullish sign for Worth and he expects the stock to break out on the upside.
Mike Khouw suggested a call diagonal options strategy. He wants to buy the December $155 call for $13.25 and sell the October $165 call for $3.75. The trading structure would cost him $9.50, which is 50 cents less than the width of the spread. The shorter-dated call expires before the earnings and if it expires out of the money, Khouw can consider selling another call to reduce the cost of the trade.
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