He thinks the stock is not going to trade higher in the near term, and he doesn't expect to see a break out on earnings. He believes holiday sales could be a positive catalyst for the stock, so he wants to sell slightly elevated implied volatility going into earnings and buy holiday earnings.
Khouw wants to sell the November 160 calls for $2.85 and buy the January 160 calls for $5.85. The options structure would cost him $3, and the trade is going to make money if the stock closes below $160 at the November expiration and above $163 at the January expiration.
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