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Huge earnings move expected from this retailer

Options traders are expecting to hear big things from J.C. Penney.

The retailer reports earnings after Thursday's bell, and the options market is expecting a 10 percent move from the shares, according to CNBC contributor Mike Khouw. That's much bigger than the stock's long-term average post-earnings move of about 5 percent.

The stock has certainly been volatile of late, rising 10 percent from Friday's close to Wednesday's open—though it gave back some of those gains in Wednesday's session.

Options traders appear to be whipped into something of a frenzy ahead of the results.

On Tuesday, three trading sessions before the event, three times the average daily options volume traded. And on Wednesday morning, the JCP 9-strike calls expiring on Friday were one of the most popular options strikes in any single equity, according to options data provider Trade Alert.

In the most notable Tuesday trade, one trader sold at least 9,000 of the weekly 8.5-strike puts for 40 cents per share. The entire profit of $360,000 (given that each contract controls 100 shares) will be realized as long as JCP finishes the week above $8.50.

"That's a fairly confident bet that the stock is going to stay here or go higher by the end of the week," Khouw surmised Tuesday on CNBC's "Fast Money."

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