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.