Tony Zhang's Southwest Airlines Options Trade

On CNBC's "Options Action," Tony Zhang spoke about a potential move higher in Southwest Airlines Co LUV. He said the stock has been underperforming since April, but it's now touching its major bullish trendline and looks to him it's ready to bounce.

Southwest Airlines is the only one of the major airlines that is adding capacity in the second half. Others are slashing capacity because of labor constraints. Zhang likes the stock a lot, going into earnings, which are due in about two weeks.

To make a bullish bet, Zhang wants to buy the September $52.50 call for $3 and sell the July $56 call for 60 cents. He is paying $2.40 for a $3.50 wide calendar call spread, risking around 4.5% of the underlying price.