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 EWJ.

He compared the performance of the ETF with the performance of Ishares Msci Taiwan ETF EWT and Ishares Msci South Korea ETF 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.