Bulls come roaring back to Chico's

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Chico's dropped on a poor earnings report Wednesday, but the bulls came roaring back yesterday.

optionMONSTER's Heat Seeker tracking program detected heavy activity in the October 17 calls, with buyers initially paying $0.25. Premiums steadily climbed and would more than double to $0.60 as nearly 20,000 contracts changed hands, more than 100 times the strike's previous open interest.

The long calls lock in the price where investors can buy stock in the retailer, letting them cheaply leverage a move higher. That way the traders know that they won't miss a rally and don't have to lock up as much capital as would by owning shares directly. (See our Education section)

The bullish option activity was cited by optionMONSTER co-founder Jon Najarian on CNBC's " Halftime Report " yesterday. The action came a day after heavy buying in the November 17 calls, which inflated more than 50 percent yesterday.

CHS gained 4.64 percent to $16, erasing the previous session's drop. Overall option volume was almost 20 times average yesterday, with calls accounting for a bullish 94 percent of the total.

Disclosure: Najarian owns CHS calls and shares.

(A version of this post appeared on InsideOptions Pro yesterday.)




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.


This article appears in: Investing , Options

Referenced Stocks: CHS

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