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Mike Khouw Sees Unusual Activity In Schlumberger

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On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in Schlumberger Limited (NYSE: SLB) and crude oil.

The demand for crude oil has been hit heavily and there is a limit to the available storage capacity to store it, said Khouw. He noticed some bearish options activity in the July futures options as some traders were betting that the July contract could drop below $20. That was a 10-million-barrel bet.

Schlumberger is going to report earnings on Friday and the options market is implying a move of 9%. Khouw saw a lot of call options activity in the name, as calls outnumbered puts 2-to-1. He noticed that around 2,200 contracts of the July $12.50 calls were sold to open for $3.20. The people who own the stock are selling these calls and that is giving them a little bit of a hedge, said Khouw.

 

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