Mike Khouw's Apple Trade

On CNBC's "Options Action," Mike Khouw suggested an options strategy for Apple Inc. AAPL.

He thinks the stock is not going to trade higher in the near term, and he doesn't expect to see a break out on earnings. He believes holiday sales could be a positive catalyst for the stock, so he wants to sell slightly elevated implied volatility going into earnings and buy holiday earnings.

Khouw wants to sell the November 160 calls for $2.85 and buy the January 160 calls for $5.85. The options structure would cost him $3, and the trade is going to make money if the stock closes below $160 at the November expiration and above $163 at the January expiration.