Somebody apparently thinks that options are too cheap in
retailer Fifth & Pacific.
Our tracking programs detected the purchase of 2,000 January 11
puts for $0.35 and 2,000 January 13 calls for $0.40. Volume was
more than 30 times open interest at both strikes.
Known as a
, the trade will make money from the stock making a big move or
from the market perceiving that one is coming. If FNP closes below
$10.25 or above $13.75 on expiration, the position will be worth
more than the $0.75 they paid to open it. (See our
Alternatively, if implied volatility increases, it would also drive
up the value of the options. That rate is currently around 39
percent, compared with its 48 percent historical average.
FNP rose 1.08 percent to $12.18. The stock is in the middle of its
recent trading range and has returned to its level from early
October, when weak results at its Juicy Couture chain caused
management to cut guidance. yesterday's strangle buyer may expect
the shares to rally or crash as the holiday shopping season brings
more news on the company's performance.
Total option volume was 4 times greater than average in the
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