Mike Khouw Sees Unusual Options Activity In Raytheon

Mike Khouw spoke on CNBC's Options Action about increased options activity in Raytheon Company RTN. The options trading volume on Thursday was four times higher than the average daily options volume and Khouw noticed mostly bearish bets.

The company is reporting earnings on October 27 and traders were betting that the stock could trade around 5 percent lower. They purchased 1,200 contracts of the January 130/135 put spread for $1.50. The trade breaks even at $133.50 or 3.3 percent lower and it can maximally make $3.50 if the stock drops to $130.