Buyers find value in Guess at support

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Guess has been struggling for more than a year, but investors on Friday thought the retailer is simply too cheap.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 6,900 March 26 calls, most of which priced for $1.45 to $1.50, against previous open interest of just 54 contracts. The bulk of the volume occurred early in the session, and those long calls later traded for as much as $1.95 as the shares rebounded from their lows. (See our Education section)

GES fell 5.79 percent to $24.39. It dropped after announcing the resignation of chief operating officer J. Michael Prince and chief financial officer Dennis Secor. The apparel company's stock opened at a three-year low, down by more than 10 percent, before paring those losses.

While consumer-discretionary stocks in general have outperformed the broader market this year, GES has struggled because of its big exposure to Europe. Nonetheless, the stock is now close to long-term support levels, which could be leading some traders to think that it's a good value. The company has also been growing quickly in Asia.

Overall option volume was 13 times greater than average on Friday, with calls outnumbering puts by 4 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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