Bulls want to ride Abercrombie higher

By David Russell,

Shutterstock photo

Abercrombie & Fitch is sitting at support, and the bulls are getting long.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,500 November 60 calls, most of which priced for $1.41, and the sale of an equal number of November 41 puts for about $1.89. Volume was more than 37 times open interest at both strikes, indicating that new positions were initiated.

The investor collected a credit of $0.48 and now stands to earn unlimited profits with the long calls if the retailer rallies toward $60 by later this year. He or she also stands to lose money to the downside because of the short puts . (See our Education section)

ANF is up 0.76 percent to $49.13 in midday trading and has been spent most of the year consolidating between $45 and $52. It's also holding support at the 100-day moving average, which some chart watchers could view as evidence of a bullish uptrend.

The upside trade pushed overall option volume in the name to almost twice the daily average, according to the Heat Seeker.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: ANF

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