Mike Khouw Sees Unusual Options Activity In Lumber Liquidators

, Mike Khouw said on the show that he noticed unusually high options volume in

as three times its average daily volume was traded on Tuesday. Khouw added that the stock dropped 25 percent by last July and another 25 percent after the company decided to lower the guidance for the year. Traders must be expecting another big move in the stock as they were buying the November 50/65 strangle. This strategy costs $4.10 and to make money the stock has to fall below $45.90 or jump above $69.10 at the November expiration, which is a 20 percent move in each direction. Khouw concluded that a lot of volatility is priced in ahead of earnings on Wednesday.