Traders are hedging their bets in Foot Locker before the
retailer's earnings report Friday morning.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 5,000 December 37 puts for $1.46. Equal numbers of
December 35 puts and December 39 calls were sold at the same time
for $0.58 and $0.38 respectively, translating into a cost of $0.50.
Volume was more than 7 times the previous open interest in each of
the three strikes, indicating that new positions were initiated.
The trader probably owns shares in the shoe retailer and wants to
hedge against a pullback. He or she now stands to collect $2 if FL
drops to $35 but must sell the stock position if it goes $39. (See
section for more on the strategy, which combines a
bearish put spread
FL declined 1.19 percent to $36.56 yesterday. The shares are up 8
percent in the last month and are now back around the same level
where they've hit resistance for more than a year. That could
make some chart watchers think that it makes sense to sell those
December 39 calls.
Overall option volume was 13 times greater than average in the
session, with that bearish trade accounting for more than 90
percent of the total.
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