Benzinga | Sep 26, 2021 05:16PM EDT

Tony Zhang's IBM Trade

On CNBC's "Options Action," Tony Zhang of OptionsPlay said he sees some weakness in IBM Common Stock (NYSE:IBM) and some industries within the tech space. He said IBM is a weak stock in a weak industry and he wants to use options to make a bearish bet. The company reports earnings on October 20, so implied volatility is elevated in IBM.

To exploit elevated implied volatility, Zhang wants to sell the November $138/$145 call spread for a credit of $2.87. If the stock stays below $138 at the November expiration, Zhang is going to collect the premium. He is going to start to lose money above $140.87 and he can maximally lose $4.13.