Mike Khouw's Wal-Mart Trade

Mike Khouw spoke on CNBC's Options Action about a future price direction of the retail stocks and he said that he is not very enthusiastic about Wal-Mart Stores, Inc. WMT.

The retailers are reporting earnings this week and Khouw is worried that Wal-Mart is not growing enough. The company is growing 1 to 2 percent each year, which is less than the economy, so it is shrinking in the real terms.

Khouw suggested a purchase of the October 72.50 / 67.50 put spread for $1.60 to make a bearish bet. The premium paid is the maximal loss and if the stock trades to $67.50 or lower at the October expiration, Khouw would make $3.40.