Mike Khouw's Netflix Options Trade

Mike Khouw spoke on CNBC's "Options Action" about an option trading strategy in Netflix, Inc. NFLX, ahead of earnings.

The company is going to report earnings on Monday and Khouw wants to sell the July 160 call for $6.45 and buy the September 160 call for $9.15. The calendar call spread would cost him $2.70. If the stock drops below $160 at the July expiration, Khouw is going to collect $6.45 and he is going to continue to own the September 160 call, with an entry price of $2.70.