Mike Khouw Sees Unusual Options Activity In Toll Brothers

On CNBC's "Options Action," Mike Khouw said that Toll Brothers Inc TOL traded more than four times the average daily call volume Monday. The company is going to report earnings Tuesday and the options market is implying a move of 7.8% in either direction by the end of the week. The average move for the event over the past 8 quarters is 6.1%.

The most active options were the September $46 calls. Around 3,000 contracts were traded for $2.25. Buyers of these calls are betting that the earnings news are going to be positive and that the stock is going to trade above $48.25 in the next four weeks.