Mike Khouw Sees Unusual Options Activity In Lululemon

Mike Khouw said on CNBC's "Options Action" that he noticed unusually high options activity in Lululemon Athletica inc. LULU ahead of earnings. The company is going to report earnings on Thursday and the options volume was 4 times the average daily volume.

Khouw said that the options market is implying a 10.5 percent move by the end of the week, which is the average move on earnings. He added that options trading were buying 50/60/70 ratio call spread risk reversal, making bets that the stock is going higher.