Mike Khouw Sees Unusual Options Activity In Kellogg Company

Early in the trading session, Khouw noticed a purchase of 2,800 contracts of the July 80 calls for $1.85. As the stock traded higher, options traders started to buy the July 85 calls for $1.65. Around 3,500 contracts of the August 85 calls were traded on Thursday and that was a bet that the stock could be trading another $5 higher at the August expiration, explained Khouw.

Traders who own Kellogg should consider selling call options against the stock, because implied volatility is high, thinks Khouw.