Mike Khouw Sees Unusual Options Activity In Nike

On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in Nike Inc NKE ahead of earnings, scheduled for Thursday. He said he saw 1.3 times the average daily call volume in Nike on Wednesday.

The options market is implying a move of 5.6% in either direction by the end of the week and the stock usually moves around 7% on the event. The most active options were the October $160 calls. Khouw noticed some institutional sales of these calls as 2,400 contracts were sold for $3.70.

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Sellers are betting the stock is not going to trade above $160 at the October expiration. If it stays below that level they are going to collect the premium. Above $160, the profit starts to trail off and the trade starts to lose money above $163.70.