Bull keep shopping at AnnTaylor

By David Russell,

Shutterstock photo

AnnTaylor Stores ripped higher on a bullish forecast yesterday, and one investor is shopping for more gains.

optionMONSTER's Heat Seeker tracking system detected a surge in call activity in the fashion retailer as existing positions were liquidated and rolled forward by a month. The selling involved 3,000 May 25 calls for $0.85 and 2,000 May 22.50 calls for $2, while the buying targeted 4,000 June 25 calls for $1.43.

ANN Chart The transaction occurred in a single second and accounted for 60 percent of the options volume in ANN. It yielded a net credit for $83,000 and gave the investor another month of exposure to the stock.

ANN rose 9.32 percent to $24.76 yesterday and is up 82 percent so far this year. The company said in a preliminary report that fiscal first-quarter profit and sales will significantly exceed its earlier forecasts. Full results will be issued on May 21.

The shares gapped higher on the news, hitting a new 19-month high of $25.15 and bucking losses in the broader market and the consumer-discretionary sector. Yesterday's close was the highest for ANN since the financial markets started melting down in September 2008.

Short interest represented a hefty 16 percent of the float as of April 15, which could also help push the shares higher.

Overall options volume in ANN was seven times greater than average yesterday, with calls accounting for a bullish 74 percent of the activity.

(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.

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

This article appears in: Investing Options
Referenced Stocks: ANN

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