Mike Khouw Sees Unusual Options Activity In Gap

On CNBC's "Options Action," Mike Khouw spoke about unusually high options activity in Gap Inc GPS ahead of earnings.

The company is going to report earnings on Thursday and the options market is implying a move of 11.5% in either direction on the event. The average move over the last eight quarters was 8.5%.

See Also: Gap Q2 Earnings Preview

On Wednesday, put options volume was more than two times the 20-day average put volume and the most active were the Aug. 23 15.50 strike puts. Options traders paid 40 cents on average for them, which sets the breakeven for the trade at $15.10 or 11% lower from the closing price on Wednesday.

Gap shares traded higher by 3.5% to $17.56 Thursday morning.