One investor is adjusting a position in Avon Products after
making a fortune in the name.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of some 19,000 July 22 calls for $1.65 and the sale of a
matching number of July 17 calls for $6.30. Volume was below open
interest in the 17s, indicating that an existing long position was
closed and rolled to the higher strike.
The investor collected $4.65 and is still
positioned to profit from further gains
in the cosmetics stock. He or she probably bought the 17s at a much
lower price and has earned big profits from the stock's 61 percent
rally so far this year.
AVP fell 3.33 percent to $22.67 yesterday. The stock touched a
12-year low in November after a long leadership crisis hurt sales,
but it's been rebounding since as the last two quarterly reports
have beaten expectations.
It's now trying to hold its ground around the same level where it
peaked in 2011 and 2012. Given that the gains have been slowing
since April, the investor probably wanted to lock in his or her
profits to guard against a potential pullback. (See our
section for other ways to manage risk.)
Total option volume was 20 times greater than average in the
session, with calls outnumbering puts by 28 to 1.
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