Bear extends position on Vera Bradley

By David Russell,

Shutterstock photo

Vera Bradley has gotten decimated since the spring, and one investor fears more downside.

optionMONSTER's Depth Charge tracking system detected the sale of 1,000 September 30 puts for $2.85 and the purchase of an equal number of September 25 puts for $1.20. Volume was below open interest in the higher-strike contracts, indicating that an existing position was rolled to the lower strike.

The trader collected a credit of $1.65 and has the right to profit further if the maker of handbags and accessories continues to drop. He or she may be using the options as protection on a long position in the shares.

VRA went public for $16 last October and rallied all the way to $52.35 by mid-May. It then reported weaker-than-expected earnings on June 2 as rising costs erased the benefits of strong revenue growth. The stock gapped lower and is now more than 40 percent below its previous peak.

Overall option volume in the name was 20 times greater than average in the session. Puts outnumbered calls by more than 2,000 to 1, according to the Depth Charge.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: VRA

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