Bulls find value in beaten-down Avon


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Avon Products has been falling for years, but now the bulls are returning to the name.

optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 2,700 contracts each in the August 16 calls and the August 17 calls. The 16s priced for $1.20 and the 17s priced for $0.85. Volume exceeded open interest at both strikes, indicating that new positions were initiated.

AVP is up 3.85 percent to $16.45 in afternoon trading. The cosmetics company lost more than 60 percent of its value between August 2008 and the middle of this year amid weak sales and turbulence in the corner office. Earnings have missed estimates for at least three straight quarters.

The stock touched $14.89 in June, its lowest level since the broader market rebounded from the mortgage crisis in early 2009. Shares have been working higher since then, and today's call buyer is looking for the rebound to continue. (See our Education section)

The next earnings report is scheduled for the pre-market on Aug. 1. Overall option volume in the name is 7.5 times greater than average so far today, with calls outnumbering puts by 8.5 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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