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Carter Worth And Mike Khouw's Deere & Company Trade

Craig Jones

On CNBC's "Options Action," Carter Worth spoke about Deere & Company (NYSE: DE) from a technical standpoint. He said that the stock is trading close to its resistance and he expects it to break out on the upside and move to $200 after earnings.

Deere & Company is going to report earnings on August 21, before the market opens and Mike Khouw wants to use options to make a bullish bet. He wants to sell the August $195 call for $1.10 and buy the September $185 call for $6.75. Total cost for the trade is $5.65. If the stock rallies above $195 on the earnings day, Khouw's maximal profit is going to be $4.35.

If the stock trades below $195 at the August 21 expiration, the short call is going to expire worthless and the breakeven price for the long call is going to be $190.65.

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