Mike Khouw's Celgene Corporation Trade

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On CNBC's Options Action
, Mike Khouw spoke about options and how to use them to buy stocks and pay less. Traders who want to buy a stock should consider selling a put option. They should look for an expiration of 30 to 90 days and an annualized return of 12 percent. Khouw showed his
Celgene CorporationCELG
trade as an example. He would sell the April 115 put for $2.60, which is equal of a return of 1 percent per month. If the stock drops below $115, the trader would have to buy the stock, but the trade would start to lose money below $112.40 or 9 percent lower from the current price.
Posted In: CNBCMediaMike KhouwOptions Action
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