Value hunters have made huge profits in Abercrombie & Fitch,
and yesterday they turned to fellow retailer American Eagle
optionMONSTER's Heat Seeker scanners showed heavy volume in AEO's
November 16 calls, with more than 22,000 contracts trading against
open interest of just 3,572. Most of the large blocks priced for
$0.40 and $0.45.
lock in the price where shares can be purchased, letting investors
cheaply position for a rally and enjoy leverage if one occurs. (See
AEO rose 1.7 percent to $15.53 yesterday. It fell hard in August
after markdowns hurt results but then stabilized around $13 and has
rebounded in the last month.
Total option volume was 8 times greater than average in the
session, with calls outnumbering puts by a bullish 12-to-1 ratio.
Back on Oct. 11, rival teen retailer ANF saw buying in the
short-term 34 calls and 37 calls for about $1.30 and $0.50
respectively. That stock subsequently recovered, and the 34s shot
up to $4.15, while the 37s climbed to more than $1.80. The move
reflects some extreme leverage from an 11 percent gain in the share
(A version of this post appeared on
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.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.