Mike Khouw Sees Unusual Options Activity In Amgen

Mike Khouw said on CNBC's "Options Action" that Amgen, Inc. AMGN traded seven times the average daily call volume on Tuesday. It was a big uptick on the news that the stock is going to be added to the Dow Jones index.

The most active options were the August $250 calls. One buyer paid $2 for 700 contracts of the August $250 calls and a total of 3,000 contracts were traded. Buyers are expecting that the rally that started on that news could continue and the stock could close the week even higher than it's currently trading.

The breakeven for the trade is at $252 or around 1.5% above the closing price on Tuesday.