One investor has a lot of confidence in Fifth & Pacific over
the long run.
optionMONSTER's Heat Seeker trade scanner detected an unusual and
highly bullish strategy in the company, formerly known as Liz
Claiborne. It involved the sale of 15,000 January 2014 10 puts for
$1.30 and the purchase of 5,000 January 2014 12 calls for $2.65.
He or she collected an immediate credit of $625,000, but the real
gains will occur if the retail stock rallies through $12 over the
course of the next 14 months. Above that level, the trader stands
to earn infinite profits on the calls, while the sold puts will
gradually become worthless.
The unusual aspect of this trade is that 3 times more of those
contracts were sold than the number of calls bought. That increased
the money received, but it also exposes the trader to major risk if
FNP goes under $10 because he or she might have triple the leverage
to the downside below that level. (See our
section for more on
FNP rose 5.21 percent to $12.11 yesterday. The stock had been
rallying on hopes of its Juicy Couture chain, but dropped on Oct. 2
after management cited weakness at the brand. Shares consolidated
for the next three weeks and have been rebounding since, which
could make some traders think that the worst of the news is already
Overall volume was 25 times greater than average in the session,
according to the Heat Seeker.
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