Mike Khouw's Starbucks Trade

On CNBC's Options Action, Mike Khouw recommended a bearish options strategy in Starbucks Corporation SBUX.

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He thinks that the stock is trading at a very high valuation and he doesn't see a lot of upside risk in the name. Khouw explained that the company had 13.3 percent of its revenue from China last year.

To make a bearish trade, Khouw wants to buy the buy the February 55 put for $1.50 and sell the February 50 put for $0.50. The put spread would cost him $0.50 and the breakeven for the trade is at $54.50. If the stock trades to $50 or lower at the February expiration, the trade could reach its maximal profit of $4.50.