Mike Khouw's The Home Depot (HD) Trade

On CNBC's Options Action, Mike Khouw suggested that investors should consider a stock replacement strategy, as a way to keep a long position in The Home Depot, Inc. HD ahead of earnings report. He also recommended a call spread as a way to get long Home Depot (HD). He said that stock is behaving very well, and the company talked about plans to hire 60,000 people going into the spring season. Specifically, Mike Khouw wants to buy the March 38 call for $0.75, and sell the March 40 call for $0.20. This trade would cost him $0.55, and it would be profitable if Home Depot (HD) trades above $38.55 at the March expiration. The Home Depot, Inc. (HD) will report earnings on February 22nd, and it needs to jump only 2% to move above $38.55. The Home Depot, Inc. (HD) gained 0.45% today, and closed at $37.86.