Todd Gordon of TradingAnalysis.com shared with the viewers of CNBC's "Trading Nation" his bullish options trade in Roku Inc ROKU. The company is going to report earnings on Aug. 7.
He expects to see a technical resistance around $125 and he noticed a bull flag technical pattern on Roku's chart. To make a bullish trade, Gordon wants to use options.
He wants to buy the Aug. $115 call, sell two contracts of the Aug. $120 call and buy the Aug. $125 call. The trade would cost him around 34 cents. The trade breaks even at $120.34 and it can maximally make $4.66 if the stock jumps to $120 after earnings. Above $120, the profit starts to trail off and at $125, the trade loses 34 cents.
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