Kevin Kelly's Bullish Home Depot Trade

Kevin Kelly recommended on Bloomberg Markets a long position in Home Depot Inc HD. The stock traded lower after earnings results, but Kelly believes the report was good and that the management couldn't have done anything better.

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He wants to make a bullish bet in the name and he wants to use options to do so. Kelly suggested that traders with a long position should sell the stock, buy the January 150 call for $6.50 and sell the January 145 put for $5.50. The risk reversal would cost him $1 and it breaks even at $151 or 0.55 percent above the closing price on Tuesday. If the stock closes below $145 on January expiration, Kelly is going to have to buy the stock at $145 and his total entry price is going to be $146.