Kevin Kelly's Bullish Home Depot Trade

Kevin Kelly recommended on Bloomberg Markets a long position in Home Depot Inc HD. The stock traded lower after earnings results, but Kelly believes the report was good and that the management couldn't have done anything better.

He wants to make a bullish bet in the name and he wants to use options to do so. Kelly suggested that traders with a long position should sell the stock, buy the January 150 call for $6.50 and sell the January 145 put for $5.50. The risk reversal would cost him $1 and it breaks even at $151 or 0.55 percent above the closing price on Tuesday. If the stock closes below $145 on January expiration, Kelly is going to have to buy the stock at $145 and his total entry price is going to be $146.