How one trader is hedging VF Corp.

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VF Corporation has been running hard, and one investor is hedging against a pullback.

optionMONSTER's Depth Charge monitoring system detected the purchase of 2,700 January 230 puts for $4.80. Equal-sized blocks were sold in the January 240 calls for $2.50 and the January 210 puts for $0.60. Volume was more than 8 times open interest at all three strikes, indicating that new positions were initiated.

The strategy cost $1.70 and will expand to $20 if the apparel stock falls to $210 or lower by expiration. The investor is also on the hook to sell shares for $240 if they go over that level, so he or she is probably an owner looking to protect their long position. (See our Education section for more on the strategy, which combines call selling with a vertical spread .)

VFC rose 0.96 to $234.48 on Friday and is up 55 percent so far this year. The apparel and footwear company has improved its operations by selling directly to customers and expanding overseas. It's also splitting its shares 4 for 1 at the end of the week.

Total option volume was 12 times greater than average in the name, with the three-way trade accounting for almost all the activity.



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: VFC

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