Mike Khouw's Patriot Coal Corporation (PCX) Trade

Mike Khouw said on CNBC's Options Action that Patriot Coal Corporation PCX performed very well so far. It gained 35% this year, and it added more than 100% in the last six months. He added that you have to be cautious with the stock that has moved so sharply. Patriot Coal (PCX) will report earnings on Tuesday, and options markets are suggesting that a pretty big move is possible, approximately 10%. It usually moves 7%. Mike Khouw suggested an options strategy in Patriot Coal (PCX). He wants to buy the February 27 call for $1.35, and sell two February 29 calls for a total of $1.40. This trade will generate $0.05. Patriot Coal (PCX) gained 2.79% today, and it closed at $26.17. In the after hours, it added 1.03%.