Mike Khouw Sees Unusual Options Activity In Celgene

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On CNBC's Options Action, Mike Khouw spoke about an options trade that he noticed during the trading session on Thursday in Celgene Corporation CELG.

A trader bought 3,000 contracts of the November 120/130 call spread and sold 1,200 contracts of the November 105 put to finance it. The trade starts to make money above $120 and it can make maximally $10 per contract or a profit of $3 million, if the stock jumps to or above $130 at the November expiration.

It starts to lose money below $105 and it can lose $3 million if the stock drops to $80. Khouw thinks that the risk/reward in the trade is very favorable.

Posted In: CNBCOptionsMarketsMediaMike KhouwOptions Action
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