Carter Worth And Mike Khouw's Xilinx Trade

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.