Jim Strugger's Kellogg Options Trade

Speaking on Bloomberg Markets, Jim Strugger of MKM Holdings suggested a bullish options strategy in Kellogg Company K.

He is bullish on the stock because he thinks the company might become a takeover target. He noticed on Monday an increased options activity in the name.

Strugger wants to sell the July 67.50/60 put spread and buy the March 77.50 call for a total credit of $0.30. He is going to collect the premium if the stock trades above $67.50 at the July expiration. If the stock trades above $77.50 at the March expiration, he is going to make additional profit on the call option. The trade can maximally lose $7.20, if Kellogg drops to or below $60 at the July expiration.