On CNBC's "Options Action," Dan Nathan spoke about unusually high options activity in Tesla TSLA ahead of earnings.
The company is going to report earnings on Wednesday after the market closes and the options market is implying an 8.5-percent move in either direction. On Tuesday, options traders bought more puts than calls in Tesla as puts outnumbered calls 1.5 to 1.
When the stock was trading at $263.60, Nathan noticed a purchase of 2,200 contracts of the August 220/110 put spreads. The trader paid $13 for them which sets the breakeven for the trade at $207. The maximal profit for the trade is $97.
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