Mike Khouw's Alibaba Trade

Mike Khouw suggested on CNBC's "Options Action" a bullish options strategy in Alibaba Group Holding Ltd BABA, which reports earnings Thursday.

Khouw wants to sell the November 3 expiration, 162.50 strike put for $1.25 and buy the November 3 expiration, 175/182.50 call spread for $3. The options structure would cost him $1.75 and he can maximally make a profit of $5.75, in case the stock jumps to $182.50 or higher at Friday expiration.