Mike Khouw's Snap Trade

Mike Khouw suggested on CNBC's "Options Action" that investors should consider selling a put spread in Snap Inc SNAP.

He explained that this options strategy is suitable when a trader is moderately bullish and when the options premiums are high. He added that the strategy is a good way to minimize risk, because it doesn't have unlimited risk.

Khouw wants to sell the July 18/17 put spread for a credit of 50 cents. The trade starts to lose money below $17.50 or 3.21 percent below the current stock price and it can maximally lose 50 cents. If the stock stays above $18 at the July expiration, Khouw is going to collect the premium of 50 cents.