Carter Worth And Mike Khouw's Adobe Trade

On CNBC's "Options Action," Carter Worth said he thinks Adobe Inc ADBE is solid and strong. The stock has returned where it was almost a year ago and it has just started to show relative outperformance to the S&P 500. Worth noticed several technical patterns that suggest the stock has bottomed and he expects it to break out on the upside.

Mike Khouw wants to use options to make a bullish bet. With earnings coming up on June 17, short-term implied volatilities are elevated relative to the long-term implied volatilities so he wants to take advantage of that dynamic by buying the September $540 calls for $28.35 and selling the June $555 calls for $4.60. The trade would cost him $23.75, which is the maximum amount he can lose. If the stock trades sharply higher, above $555 the trade is going to underperform as the spread is only $15 wide.