Mike Khouw's Celgene Corporation Trade

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

27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.

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27% profit every 20 days?

Celgene Corporation

(NASDAQ: CELG) 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.