Jim Strugger's Big Lots Hedge Ahead Of Earnings

Speaking on Bloomberg Markets, Jim Strugger of MKM Holdings suggested to traders with a long position in Big Lots, Inc. BIG an options strategy that offers protection ahead of the earnings report on Friday. The stock had a nice move higher recently and he believes it's a good idea to put on some protection.

Strugger wants to sell the September 57.50 call for $1.20 against a long stock position and buy the September 50 put for $1.50. The trade costs $0.30 and it offers protection below $49.70 or 6.12 percent lower from the current stock price. If Big Lots trades above $57.50 at the September expiration, Strugger is going to cap his selling price at $57.20.