Mike Khouw's Disney Trade

Mike Khouw said on CNBC's Options Action that he would make a bullish options trade in Walt Disney Co DIS.

He explained that the stock has reached a price level from which it has bounced in the past. It is now trading at a discount to the broad market and it is one of the best stocks around, added Khouw. He wants to exploit elevated premiums and sell the February 92.5 put for $3.25.

The trade starts to lose money below $89.25 or 5 percent lower from the current price. If the stock trades above $92.5 at the February expiration, Khouw is going to make around 3.5 percent in one month.