Mike Khouw Sees Unusual Options Activity In JC Penney

Mike Khouw spoke on CNBC's Options Action about high options activity in J C Penney Company Inc JCP. He explained that it is not uncommon to have a high options activity in days before the earnings, but JC Penney had three times average daily volume on Tuesday. It is due to report earnings on Thursday. The stock moved on average around 5 percent on earnings and right now it is implying a move of 10 percent by the end of the week. Khouw said that there was a trade on Tuesday that caught his attention. Somebody sold 9,000 contracts of the February weekly 8.5 puts for $0.40. The seller is betting that the stock is going to trade above $8.10 by the end of the week.