Mike Khouw Sees Unusual Options Activity In Lululemon

On CNBC's "Options Action," Mike Khouw said puts outpaced calls on more than 2.8 times the average daily put options volume in Lululemon Athletica Inc LULU on Tuesday. The company is going to report earnings on Wednesday, after the bell, and the options market is implying a move of 6% in either direction. The stock moves 5% on average on the event.

Weekly puts were the most active on Tuesday, said Khouw. During the session, he noticed a purchase of the September $387.50/$355 put spread for $8.90. Buyers of the put spread are risking about 2.3% of the current stock price on a bet the stock could finish as much as 8% lower by the end of the week, said Khouw.