Dan Nathan's Wal-Mart Trade

Dan Nathan suggested on CNBC's Options Action a bearish options strategy in Wal-Mart Stores, Inc. WMT. The stock rallied sharply from its lows in December and Nathan believes it could have a pullback after it traded 2.97 percent lower on Friday.

To make a bearish bet, Nathan wants to sell the May 13 weekly, 65 strike put for $0.50 and buy the May 20, 65 strike put for $1. The trade would cost him $0.50 and it breaks even at $64.50. He is hoping the stock is going to trade slightly above $65 at the May 13 expiration, so that the May 13, 65 strike put expires worthless. If that scenario happens, he is going to own the May 20, 65 strike put ahead of earnings on May 19 and he is going to consider selling a lower strike put to further reduce the cost of the trade.