Mike Khouw Sees Unusual Options Activity In Costco

On CNBC's "Options Action," Mike Khouw said that Costco Wholesale Corporation COST saw more than double the average daily options volume on Wednesday and calls significantly outpaced puts.

The company is scheduled to report earnings on Thursday, after the market close, and the options market is implying a move of 4.3% in either direction. Over the last eight quarters, it moved 3.1% on average.

The most active options were the September $350 calls as over 4,000 contracts were traded for $5.70. The volume exceeded the open interest so we can conclude that those were opening trades, explained Khouw. Buyers are betting that the stock is going to trade above $355.70 or more than 3.2% higher.