On CNBC’s “Options Action,” Mike Khouw spoke about unusually high options activity in Nike Inc (NYSE: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.
