Mike Khouw Sees Unusual Options Activity In Cisco

On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in Cisco CSCO ahead of earnings. The company is going to report earnings on Wednesday after the close, and the options market is implying a move of about 5 percent. The move is in line with the average move of 4.5 percent over the last eight quarters.

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Although the call volume outpaced the put volume on Tuesday, the bearish bets outpaced bullish ones, said Khouw. He noticed a purchase of the May 51 puts for 71 cents during the session on Tuesday. The trade breaks even at $50.29 or 3.33 percent below the current price.