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On Friday’s CNBC’s Options Action, the crew analyzed the retail sector’s recent performance. The retailers have seen positive earnings surprises this past week from names like Kohl’s, Nordstrom’s and Ralph Lauren. Home Depot (HD) is part of both the retailers and homebuilders subsector, which has both outperformed this past week. Additionally, HD currently is trading at a 10% discount to its historical valuations and outperforming its peers. HD reports earnings on Nov 15th, creating a bullish earnings play. Expecting a possible move higher, Michael Khouw suggested buying a Dec 120/130/135 Call Spread Risk Reversal for $.75 Debit.

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