Bulls shopping at Michael Kors

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Michael Kors has pulled back following a big run, but traders are looking for a bullish run into the next holiday shopping season.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,900 January 100 calls for $0.80 and the sale of 1,900 January 125 calls for $0.05. Volume surpassed open interest at both strikes, which indicates new money was put to work on the long side.

Owning calls locks in the price where investors can buy KORS, while selling them obligates the investor to unload shares if a certain level is reached. In the case of Tuesday's trade, they will collect $25 if the stock goes to $125 by early 2015. Based on the $0.75 entry price, that would represent profit of about 3,233 percent. (See the discussion of vertical spreads in our Education section.)

KORS fell 3.19 percent to $77.44 yesterday. It roughly tripled between late 2011 and early this year, but has retreated more than 20 percent since then. Other retailers have been strong recently, which could make some investors expect this stock will come to life as well.

Overall option volume was slightly above average in the name, with calls accounting for a bullish 60 percent of the total.



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: KORS

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