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Carter Worth And Mike Khouw's EWJ Trade

On CNBC's "Options Action," Carter Worth suggested traders should consider a catch-up trade in iShares MSCI Japan ETF (NYSE: EWJ).

· 10/11/2020 10:58

On CNBC's "Options Action," Carter Worth suggested traders should consider a catch-up trade in iShares MSCI Japan ETF (NYSE:EWJ).

He compared the performance of the ETF with the performance of Ishares Msci Taiwan ETF (NYSE:EWT) and Ishares Msci South Korea ETF (NYSE:EWY) and he concluded that EWJ is lagging behind these ETFs. He expects EWJ to catch up with EWT and EWY and he sees a 6% to 8% of upside potential.

Mike Khouw wants to use options to trade EWJ. He wants to buy the January $63 call for 65 cents and sell the November $63 call for $20 cents. The trading structure would cost him 45 cents and he is hoping the stock is going to close below $63 at the November expiration and then rally above $63.45, going into the January expiration.