Mike Khouw's FedEx Options Trade

On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in FedEx Corporation FDX. The company is going to report earnings on Tuesday and Khouw wants to use a risk reversal options strategy to bet that the stock is going to move higher.

He wants to sell the Jan. $160 put for $6.25 and use the proceeds to buy the January $180/$200 call spread. The trade breaks even at $180 and it can maximally make a profit of $20. If the stock drops below $160 at the January expiration, Khouw is going to have to buy it for $160.