On CNBC's "Options Action," Mike Khouw said that calls outpaced puts in Cisco Systems Inc (NASDAQ:CSCO) by about two to one over the last 20 days and the ratio was almost three to one on Tuesday.
The company is scheduled to report earnings on Wednesday after the bell and the options market is implying a move of 4.5% in either direction by the end of the week. That's less than Cisco's average move for the event of 6.7%.
During the session on Tuesday, Khouw noticed a trade of 2,900 contracts of the May $53 calls. Buyers were paying $1.22 for them, which sets the break even for the trade at $54.22 or 2.44% above the closing price on Tuesday.