Mike Khouw Sees Unusual Options Activity In Disney

On CNBC's "Options Action," Mike Khouw spoke about bearish options activity in Walt Disney Co DIS ahead of earnings. He said that puts significantly outpaced calls on Monday and ultimately they traded two times the average daily put volume.

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The options market is implying a move of 5% in either direction and it typically moves around 2.2% on the event. The most active contracts were the August $115/$105 put spreads. Traders paid around $2.50 for them, which sets the break-even at $112.50. The maximal profit is $7.50.

Khouw concluded that it seems retail traders are making bearish bets that Disney is going to be a little bit disappointed out of earnings.