Ann holder wants out

By David Russell,

Shutterstock photo

Ann surged on strong earnings earlier in March, but one big investor wants out. ANN

optionMONSTER's tracking systems detected the sale of 20,000 April 26 calls for $1.75 against open interest of 374 contracts. The trade accounted for most of the activity in the apparel company, which recently changed its name from AnnTaylor.

ANN rose 2.33 percent to $27.64 yesterday. It reported better-than-expected results for the fiscal fourth quarter on March 11. Management also forecast a strong first quarter and said it would increase its stock buyback program.

The shares gapped higher on that news and have fluctuated between $26 and $28 ever since. Thursday's call sale reflects a belief they're likely to remain in this range or decline in coming weeks.

ANN fell as soon as the options traded, likely the result of hedging by the market maker who bought the calls and wanted to offset his or her long exposure.

The investor who wrote the calls is now obligated to sell ANN for $26 if it closes at or above that level on expiration. Including the credit they brought in, that translates into an exit price of $27.75. See our Education Section for more.

Overall options volume in the name was 21 times greater than average in the session.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Options
Referenced Stocks: ANN

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