American Eagle Outfitters is starting to pick itself up after a
major selloff, and call buyers are rushing in.
optionMONSTER's Heat Seeker tracking system detected unusual
activity in near-the-money September contracts on hopes the stock
will regain some of the ground lost following a disastrous earnings
release 11 weeks ago.
Traders snapped up more than 4,800 September 13 contracts for
$0.55 to $0.70 and about 3,400 September 12 calls, mostly for $0.75
to $1.30. The September 14s also saw turnover north of 3,300, with
most of the pricing at $0.35. Volume was above open interest in all
AEO rose 4.22 percent to $12.84 yesterday. The call activity
occurred late in the morning at the same time the shares were
traded heavily, indicating purchases by an institutional buyer.
The retailer plunged by 17 percent on May 26 after projecting
second-quarter profit of just $0.03 a share -- far below the $0.21
analysts had expected. The news overshadowed an inline report for
the preceding quarter, and drove the stock down to levels it hadn't
seen since September 2009.
AEO pushed lower before bottoming out at $11.35 a month later,
and has been fighting its way higher since. Yesterday's buying
drove the stock above its 50-day moving average, which may cause
some chart watchers to expect further gains.
The company, which also got a boost from takeover rumors, will
issue its next earnings report before the bell on Aug. 25.
Overall options volume in the stock was 8 times greater than
average in the session. Calls accounted for a bullish 90 percent of
(Chart courtesy of tradeMONSTER)