Mike Khouw Sees Unusual Options Activity In Kohl's And Macy's

On CNBC's "Options Action", Mike Khouw spoke about options activity in the retail space ahead of earnings.

The options market is implying a move of 13 percent for J C Penney Company Inc JCP, 9 percent for Macy's Inc M and 8 percent for Kohl's Corporation KSS and Nordstrom, Inc. JWN.

Put options activity was higher than usual in Macy's as put options volume run twice the average daily volume. On the other hand, call options were active in Kohl's, as the call options volume Tuesday reached twice the average daily call options volume.

Khouw noticed that options traders are buying the November 10 expiry, 1x2 41.5/45 call spread in Kohl's. They're betting that the stock is going to trade up on earnings, around the $45 price level.