Mike Khouw Sees Unusual Options Activity In Square

On CNBC's "Options Action," Mike Khouw spoke about options activity in Square Inc SQ he saw ahead of the company's earnings release.

The options market is implying a move of 8.8% in either direction by the end of the week, said Khouw. He is not surprised by the size of the move because the stock moved 7.5% on average over the course of the last eight quarters.

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The bulls and bears were evenly matched on Tuesday, but the most active options were the August 7, $140 calls. Just under 5,000 contracts were traded for about $4.65, said Khouw. He explained that buyers are betting that the stock is going to trade higher than $144.65 by the end of the week.

Late Wednesday, reported a big second-quarter EPS and sales results. The stock was up 11% at time of publication.