Tony Zhang Sees Bullish Sign For American Water Works

Tony Zhang said on CNBC's "Options Action" that he saw a slow rotation in the utility sector in the last couple of months and he wants to use American Water Works Company Inc. AWK as a way to play a further upside. The utility sector has outperformed the market and American Water Works has outperformed the utility sector. Zhang, the chief strategist for OptionsPlay, sees that as a bullish sign.

To make a bullish bet, he wants to buy the January $160/$175 call spread for a total cost of $5.15 or 3.2% of the stock's value. The trade breaks even at $165.15 or around 2.5% above the closing price on Friday.