Dan Nathan's Apple Options Strategy Ahead Of Earnings

On CNBC's "Options Action", Dan Nathan spoke about an options strategy in Apple Inc. AAPL. He noticed that the implied volatility in the name is elevated, ahead of the earnings report on May 1 and he wants to sell a strangle to profit from a potential decline in implied volatility.

Specifically, Nathan wants to buy the stock and sell the June 180 call against it. He can collect $1 for the sale of the call and he also wants to sell the June 150 put for $2. The strategy would allow him a $3 downside protection and in case the stock moves higher, his selling price would effectively be $183.