Mike Khouw suggested on CNBC's Options Action that traders should consider a bearish options strategy in Lowe's Companies, Inc. LOW ahead of earnings.
The company is going to report earnings on March 1 and Khouw wants to sell the March 77/81 call spread for a credit of $1. If Lowe's Companies trades below $77 at the March expiration, Khouw is going to collect $1. The trade starts to lose money above $78 and it can make a maximal loss of $3, if the stock jumps to $81 or higher.
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