Mike Khouw's Amazon Options Trade

Mike Khouw spoke on CNBC's "Options Action" about an options strategy in Amazon.com, Inc. AMZN.

He thinks it would be a good idea to sell a put spread in the name. Specifically, he wants to buy the August 910 put for $26.35 and sell the August 900 put for $23.15. The total credit on the trade is $3.20, which is 0.33 percent of the current market price.

If the stock stays above $910 at the August expiration, Khouw is going to collect $3.20. The trade starts to lose money below $906.80 and it can maximally lose $6.80, if the stock drops to $900 or lower.