American Eagle Outfitters is down again today, and the bears are
piling into the clothing retailer.
optionMONSTER's Depth Charge tracking program detected the purchase
of more than 15,000 April 12 puts, most of them priced at $0.15.
Volume was more than 13 times open interest at the strike, which
indicates that new positions were initiated.
Puts lock in the price where a stock can be sold, rising when
shares fall. Investors use them to
hedge long positions
in a stock or to speculate on a drop. (See our
AEO is down 5.81 percent to $13.39 in afternoon trading after
management predicted weak demand for its teen apparel. While
earnings and revenue beat expectations, guidance was below
consensus estimates. Interim CEO Jay Schottenstein also admitted
that "tough macro conditions have persisted in our retail sector"
and "our merchandise and overall customer experience fell short of
Another trader took a more bullish stance, buying 2,500 June 40
calls and selling 2,500 June 45 calls. Known as a
bullish call spread
, the strategy cost $1.55 and will earn profit of 222 percent if
AEO rebounds to $45 or higher on expiration.
Total option volume is more than 5 times the daily average in the
name so far today.
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