Abercrombie & Fitch has been trying to bottom, and one
investor expects a rally soon.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of about 2,200 November 35 calls for $1.87 and the sale of
an equal number of November 27 puts for $0.52. Volume was more than
twice open interest at both strikes.
The trade cost $1.35 and is leveraged to upside in the clothing
retailer, with the
appreciating in the event of a rally while the
will dwindle in value. Just the opposite will happen to the
The advantage of the position versus simply owning shares is that
it's relatively inexpensive and lets the investor benefit from
higher prices in the next two months. Aside from the initial $1.35
outlay, he or she may consider the risk of additional loss minimal
because the stock would have to go below $27 for the puts to
generate a loss. It hasn't been that low in more than three years.
ANF is off 0.37 percent to $33.33 in morning trading. It's down by
about 35 percent in the last six months but has been holding its
lows since then. Management is also scheduled to appear at the
Telsey Advisory Group Fall Consumer Conference at 12:55 p.m. ET
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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