Mike Khouw Sees Unusual Options Activity In Applied Materials

On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in Applied Materials, Inc. (NASDAQ: AMAT) on Wednesday.

The company is going to report earnings on Thursday and the options market is implying a move of 4.6% in either direction, which is inline with the average move of 4.1%. The options volume on Wednesday was higher than the daily average and calls outnumbered puts by more than 2 to 1, said Khouw.

During the session on Wednesday, Khouw noticed a purchase of August 14, $65/$67 call spread for $1. With the trade, traders are risking a dollar to potentially make a dollar, explained Khouw.