Mike Khouw's Lululemon Trade

On CNBC's "Options Action", Mike Khouw suggested a bullish options trade in Lululemon Athletica inc. LULU. The stock traded sharply higher on better-than-expected earnings results and a strong full-year outlook.

See Also: Analysts Cheer Lululemon's Impressive Growth, Innovation Is Still Key

Khouw thinks that traders who missed the move should use options to make a bullish bet. He thinks it would be a good idea to sell the Dec. $185 put for $8, buy the Dec. $200 call for $17 and sell the Dec. $220 call for $9. The trade breaks even at $200 and it can maximally make $20. If the stock trades below $185 at the December expiration, Khouw would have to buy the stock and pay $185 for it.