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Mike Khouw Sees Unusual Options Activity In Tesla

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On CNBC's "Options Action", Mike Khouw spoke about Tesla, Inc. (NASDAQ: TSLA). The company is going to report earnings on Wednesday and Khouw noticed unusually high options activity ahead of the event. The options market is implying a move of 10 percent this week and that is in line with what it has done historically on earnings, said Khouw.

He noticed an interesting trade on Tuesday. There was a purchase of 1,000 contracts of the February 8 expiration, 345-strike calls. The trader paid around $3.50 for the calls, which sets the breakeven for the trade at $348.50 or 17.16 percent above the current market price. Khouw explained that a move of that size is rare, but it is not unprecedented. There were five moves of that magnitude or larger in Tesla. Khouw believes the trade could also be a hedge for one of the many traders with a short position.

Posted-In: CNBC Mike Khouw Options ActionOptions Markets Media


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