Tony Zhang's IBM Trade

On CNBC's "Options Action," Tony Zhang of OptionsPlay said he sees some weakness in IBM Common Stock IBM and some industries within the tech space. He said IBM is a weak stock in a weak industry and he wants to use options to make a bearish bet. The company reports earnings on October 20, so implied volatility is elevated in IBM.

To exploit elevated implied volatility, Zhang wants to sell the November $138/$145 call spread for a credit of $2.87. If the stock stays below $138 at the November expiration, Zhang is going to collect the premium. He is going to start to lose money above $140.87 and he can maximally lose $4.13.