Mike Khouw's Bullish Yeti Trade Ahead Of Earnings

On CNBC's "Options Action," Mike Khouw suggested that traders should consider a bullish options trade in Yeti Holdings Inc YETI, which is scheduled to report earnings on Thursday. The options market is implying a move of 10% in either direction and the stock moves around 7.6% on average on the event.

Khouw wants to sell the March $80 call for $3 and the March $65 put for $2.60 and he wants to use the proceeds to buy the May $72.50 call for $9.10. The trade would cost him $3.50, which sets the breakeven at $76. He is trying to take advantage of the idea that the shorter-term options are going to decay faster than the longer-term call he owns.