Traders are doubling down on one data darling.
Shares of Western Digital saw higher-than-average options activity in Wednesday's trading session, with traders betting that the technology stock could mount a sizable rally ahead of its October earnings report, said Mike Khouw, co-founder and chief strategist at Optimize Advisors.
Options traders placed twice as many bullish bets as bearish ones on Western Digital, with call option buying doubling that of puts, but the timing of their trades was somewhat unusual, Khouw said Wednesday on CNBC's "Options Action."
"We do often see weekly calls trade, often the week prior to something that's going to go on," he said. "They're going to be reporting earnings on Oct. 24, so this is somebody who's making a bullish bet that we're going to see a rise in Western Digital of 4% or more prior to earnings. And so I think that is pretty notable."
Western Digital shares closed at $61.05 on Wednesday. The stock rose by nearly 2% in early Thursday trading, hovering just below $62.
"We're looking at getting above 62 bucks by at least the amount of premium that they spent, bearing in mind that [traders are] expecting this to take place within the next two weeks," Khouw said. "So, obviously, they're eyeing some short-term moves."
And Western Digital isn't the only tech play traders are eyeing here.
"We also ... saw some significant call activity in Juniper as well today," Khouw said, referring to networking company Juniper Networks, which is expected to report earnings on the same day as Western Digital. Juniper shares fell nearly 2% early on Thursday.
Meanwhile, Dan Nathan, co-founder and editor of RiskReversal.com, was watching shares of chipmaker Micron.
"This is kind of tied to the same trade," he said Wednesday on "Options Action." "Huge intraday reversal. Micron reports [Thursday] after the close, implying about [a] $3.75 move or so in either direction. That's a pretty large move, so I think so goes Micron, so goes the rest of the group near term."
Micron shares were down 1% in early Thursday trading.