Mike Khouw Sees Unusual Options Activity In DR Horton

On CNBC's "Options Action," Mike Khouw said he saw more than three times the average daily call volume in D. R. Horton Inc DHI on Thursday. All of that was a result of a single very large trade.

Over 11,000 contracts of the January $95 calls were traded for $0.50. Khouw explained this doesn't necessarily mean the trader believes the stock is going to trade around 40% higher because there was already a high open interest in the strike. The trader might be closing the short call position because she or he believes the drawdown is coming to an end and the stock is hitting a support.