Tony Zhang of OptionsPlay spoke on CNBC's "Options Action" about a bullish options strategy in Home Depot Inc HD. He believes there is a shift in consumer spending going on, away from travel and entertainment and into home improvement and furniture.
Zhang expects to see even stronger Q3 and the second half for stocks like Home Depot Inc HD. He wants to use options to make a bullish bet.
He wants to sell the October $277.50 / $262.50 put spread in Home Depot to collect a net premium of $5.90. If the stock stays above $277.50 at the October expiration, Zhang is going to keep the premium. Below $271.60, the trade starts to lose money and if the stock drops to $262.50 or lower, it is going to reach its maximal loss of $9.10.
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