Andrew Keene's Home Depot Options Trade

Speaking on CNBC's Trading Nation, Andrew Keene of AlphaShark suggested that traders should consider a bullish options strategy in Home Depot Inc HD.

He noticed that options traders are buying the February 140 calls in the name for the second day in a row and he decided to take a closer look at Home Depot. Keene analyzed its chart and he saw that the stock is facing a short-term resistance at $131 and a long-term resistance at $137. He also noticed a bull channel pattern on the weekly chart and he concluded that the stock is going higher. He added that Home Depot bottomed at $120 and he said that he would buy it on any pull back.

To make a bullish bet, Keene wants to buy the February 135/140 call spread for $1.40. The trade breaks even at $136.40 or 5.38 percent above the current stock price. It can maximally make a profit of $3.60.