Mark Sebastian's Coach Trade

Mark Sebastian of Option Pit shared with the viewers of Bloomberg Markets his options trade in Coach Inc (NYSE: COH).

The company is going to report earnings on January 31 and Sebastian believes it's going to post good results. He is bullish on Coach and he thinks it could move toward $40 in a couple of months. To make a bullish bet, Sebastian wants to buy the May 36/41 call spread for $1.50.

The trade breaks even at $37.50 or 5.40 percent above the current stock price and it can maximally make a profit of $3.50 if the stock jumps to $41 or higher.