Dan Nathan Sees Unusal Options Activity In Home Depot Inc Ahead Of Earnings

, Dan Nathan spoke about options activity in

ahead of earnings. He said that the options market is implying a move of 3 percent in either direction, which is less than the four quarter average of 3.3 percent. Call options volume was 4 times average call options volume and calls outnumbered puts three to one. When the stock reached $120.40 a trader sold 4,000 contracts of the August 120 calls to close and bought 4,000 contracts of the September 125 calls for $1.00. The trade breaks even at $126 or approximately 5 percent higher at the September expiration. Nathan presented a chart which shows that

pulled away from its four year trend line and it is now consolidating. Any disappointment could lead to a pull back to the trend line, thinks Nathan. He added that options are very cheap heading into the earnings, which shows to him that investors are very complacent.