Tony Zhang's Bullish MGM Resorts Options Trade

Tony Zhang of OptionsPlay suggested on CNBC's "Options Action" that investors should consider a bullish options trade in MGM Resorts International MGM ahead of earnings. The company is going to report earnings on Wednesday and Zhang is looking for a breakout to $38. The options market is implying a move of 7.9% in either direction and the average move for the event is 5.5%.

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Before the breakout above $32, the stock has been pretty range-bound between $30 and $32 for a couple of months, but it showed a very strong relative strength to its sector. That is a type of relative strength Zhang wants to see going into earnings.

To make a bullish bet, he wants to buy the April $35/$40 call spread for $1.60. The trade breaks even at $36.60 or around 6.9% above the closing price on Friday. It can make a maximal profit of $3.40 if the stock moves above $40 at the April expiration.