Mike Khouw's Uber Trade Ahead Of Earnings

On CNBC's "Options Action," Mike Khouw shared with the viewers his way to trade Uber Technologies Inc UBER ahead of earnings. Uber reports on August 6 and the options market is implying a move of around 9% in either direction.

Khouw finds it extraordinary that the stock is trading higher on the year in spite of the impact of COVID-19 on its business. Uber also has other issues, like big negative cash flow and anti-trust concerns.

Khouw has a Neutral to Bearish view on the stock so he wants to sell the August $30.50 call and buy the August $31.50 call for a total credit of 40 cents.

If the stock stays below $30.90 at the August 21 expiration, Khouw is expected to collect the premium, which is his maximal profit. He can at most lose 60 cents per share with this trade.