Coca-Cola Trade by Mike Khouw

On CNBC’s “Options Action,” Mike Khouw talked about Coca-Cola Co (NYSE: KO). He said the stock has yet to hit its pre-pandemic highs and is offering a dividend yield of around 3%, providing some support.

The company is set to report earnings on Wednesday and the stock doesn’t move much on earnings. Khouw sees Coca-Cola as a reasonable value when you compare it to everything else you can look at. He wants to buy January’s $57.50 calls for $2.14 and sell August’s $57.50 call for 70 cents. The transaction would cost him $1.44. Khouw’s idea is that Coca-Cola goes a little higher, towards $57.50, so that August’s $57.50 call is out of the money. He would then sell another call at his long position.

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