Mike Khouw Sees Unusually High Bearish Options Activity In Facebook

Mike Khouw spoke on CNBC's "Options Action" about a bearish options activity in Facebook Inc FB, ahead of earnings.

The company reports earnings on Wednesday and the stock usually moves 5 percent on earnings, which is equal to the move that the options market is implying. He noticed on Tuesday that traders were buying the August 157.50 puts for $2.30. Around 6,400 contracts were traded during the trading session. The trade breaks even at $159.80 or 3.32 percent below the current stock price.