Coach strategy looks for downside

By David Russell,

Shutterstock photo

The option volume this morning in Coach is showing concern for the downside.

COH Chart COH is up 0.64 percent to trade at $42.30 this morning. Shares had been volatile in the days leading up to the company's earnings report yesterday, bouncing between $43 and $41. The stock hit a two-year high of $43.25 last week, running up from $34 at the last earnings announcement.

One trader bought 5,000 June 40 puts for $1 and, seconds later, sold 2,500 June 43 calls for $1.25. The open interest at both strikes was less than 200 contracts.

This trade is looking for the downside in the upscale accessories retailer and will pay off if shares fall through support levels. It could also be a ratio collar spread against long shares, with the call sale offsetting some of the cost of the puts but not fully limiting the upside if shares continue to climb higher.

(Chart courtesy of tradeMONSTER)

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: COH

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by