Mike Khouw's Coca-Cola Trade

On CNBC's "Options Action," Mike Khouw spoke about Coca-Cola Co KO. He said the stock has not yet reached its pre-pandemic highs and it is providing about a 3% dividend yield, which lands some level of support.

The company is going to report earnings on Wednesday and the stock doesn't move a great deal on earnings. Khouw sees Coca-Cola as a reasonable value when you put it relative to everything else you can look at. He wants to buy the January $57.50 calls for $2.14 and sell the August $57.50 call for 70 cents. The trade would cost him $1.44. Khouw's idea is that Coca-Cola is going to move slightly higher, towards $57.50, so that the August $57.50 call expires out of the money. He would then sell another call against his long position.