Mike Khouw Sees Unusual Options Activity In Intel

On CNBC's "Options Action," Mike Khouw said that Intel Corporation INTC traded about two times as many calls as puts on Wednesday. The options market is implying a move of 6.6% ahead of the earnings report, scheduled for Thursday after the bell.

During the session, one trade caught Khouw's attention. He noticed that someone bought 1,000 contracts of the July $50/$70 risk reversal for a credit of around 80 cents. The trader sold July $50 puts and used the proceeds to buy the July $70 calls.

The trade is going to make a profit of 80 cents if the stock closes between $50 and $70 at the July expiration. Above $70, it is going to make additional profit on a long call position. The trade is going to lose money below $49.20. If the stock closes below $50 at the July expiration, the trader is going to have to buy the stock for $50.