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By Mike Yamamoto

LIZ Chart

Shares of Liz Claiborne (LIZ) have fallen more than 40 percent in the last month, and traders apparently believe that the stock will not rise above these levels and will see less volatility.

LIZ is down another 6.08 percent this afternoon to $4.51, its lowest level since Oct. 2. The apparel retailer's shares were up at a 52-week high of $7.88 as recently as mid-October. A year ago the price was down at $1.46 and clearly the volatility has subsisted.

Option selling is the name of the game in LIZ today, as we see 15,000 of the January 2011 5 calls sold for $1.25. The open interest at that strike was 190 contracts, and the average total options volume for the name is just 1,140 a day.

We also see a large block of stock trade some time later, so this could be a so-called delta-neutral trade. Either way, the trader is expecting volatility to decrease and shares to stay below $5 for the long term.

(Chart courtesy of tradeMONSTER)

Source: Liz Claiborne Calls Are Selling as Traders Expect Less Volatility