One trader made a massive bet ahead of CBS Corporation's earnings report that the stock could soon be off to the races.
On Wednesday, when options volume ran eight times its average daily volume, one trader bet nearly $1.5 million that CBS' stock could break out to a five-month high by next week. Specifically, the trader bought 12,000 of the February 57-strike calls for $1.23. Since a call gives one the right to buy a stock for a price at a given time, this trader is betting that CBS will be above $58.23 by February expiration, or 2.5 percent higher by Feb. 20. Since each contract controls 100 shares, each contract cost $123. Multiply that by 12,000 and you get $1.47 million.
The $58 per share level represents a key technical level for CBS, which reports earnings Thursday afternoon. "When you look at a chart, you see the stock has been increasing a little bit and is bumping up against the 200-day moving average and it has this increasing 50-day moving average," said Dan Nathan, editor and founder of RiskReversal.com and a CNBC contributor. "It looks like it could be setting up for a technical breakout on better than expected results."