Traders bet Gap could plunge 11% on earnings


Gap Inc. could be headed for a major plunge.

Options traders are betting the clothing retailer’s shares could drop by over 11% after its Thursday earnings report, bets largely fueled by the stock’s higher-than-usual implied volatility, says longtime market-watcher Mike Khouw.

“We did see more than two times the 20-day average put volume,” or bearish trades, in Gap as the stock’s 11.5% implied move far outweighed its average 8.5% move in either direction after earnings, said Khouw, who is co-founder and chief strategist at Optimize Advisors.

The most active trades were purchases of the $15.50 weekly puts expiring this Friday, he said Wednesday on CNBC’s “Options Action.”

“Those were…


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