Volatility strategy in Men's Wearhouse

Men's Wearhouse shares are at their lowest levels since December, and one trader is combining options with the stock.

MW is down 1.13 percent to trade at $27.94. The clothing retailer has run above $40 in March but is now at its lowest levels since gapping higher after earnings results on Dec. 7.

The option volume is just above 13,000 contracts, which is very unusual for this name. MW usually trades just 480 contracts a day with total open interest of 5,432.

A trader bought 6,500 November 30 calls for $1.85 and, at the same time, sold the same number of the November 24 puts for the bid price of $1.25, according to optionMONSTER's systems. The open interest at both strikes was less than 100.

This combination on its own is quite bullish, but about a minute later 435,000 shares were sold for $28. The total stock volume is only 674,000.

Like many other stock/option trades we have seen today, this is not a directional trade but a play on volatility and potentially out-of-line option prices . (See our Education section)

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