Mike Khouw Sees Unusual Options Activity In Pandora Media

On CNBC's Options Action, Mike Khouw spoke about unusually high bearish options activity in Pandora Media Inc P on a day when the stock spiked 5.53 percent.

Put options trading volume was 13 times higher than the average daily put options volume and the most active was the January expiration. A trader bought 20,000 contracts of the January 20 puts for $2.70, paying $5.4 million in premium. The breakeven for this trade is at $17.30 or approximately 17 percent lower.

Khouw explained that the options market is expecting a lot of volatility in the name and the options prices are implying a move of 30 percent, up or down, until the January expiration.